Self employed mortgage question for any Mortgage Advisers

Tatsky

Hi Guys

I was hoping any mortgage advisers on here could shed some light.

I have a mortgage through Skipton. Had it for over 3 years now, and now on standard rate. I am paying £100 per month over payment, as on the standard rate the monthly repayment is less than it was on our fixed rate period.

Never missed a payment, as far as I am concerned I am a good customer. Up to date payments and overpaying now.

We have an opportunity to buy a new house. This new house has 1 more bedroom than our current house, and a good sized garden which we need for our young boy. The property value is actually £5k less than our current house is valued at. This is because it is a repossesion. Actually, it is on market for £100k, but I would offer up to £110k. Our house is valued at £115k.

Sounds good right? Issue is, I have been self employed for 18 months, and have 1 year full accounts with 1 year projection. So that is proving difficult getting a new mortgage. Abbey would lend me up to 300k based on earnings, but require 2 years accounts.

My question is, as I am with Skipton and have been a good customer for 3 years would they entertain us moving to this new house, with possibly a smaller mortgage than we have with them currently. Better house, less mortgage, and I have cash to put in.

I have never informed Skipton I am self employed, so concerned about getting in touch about this and having them penalising me on my current mortgage. Would/could they do this? I am earning double now what I did when I was employed and took out the mortgage, and things are on the up.

Thanks for any advice anyone can give.

Tatsky

unite79

Highly unlikely, you would need to ring them and ask.

You current circumstances will not alter things in relation to your current mortgage, but will be taken in consideration for the new mortgage!

IFA_In_Surrey

Unfortunately, like the vast majority of lenders, Skipton would require 2 years accounts as you are self-employed and the fact that you have been a good customer doesn't help I'm afraid.

Alliance & Leicester only require 1 years accounts, but strangely also require that the applicant has been self-employed for 2 years - whether they would be open to negotiation, as you have been self-employed for 18 months, I'm not sure, without further investigation.

Other options would be; Beacon Home Loans - their interest rates won't be as good as Abbey's/A&L's but they only require the applicant to have been self-employed for one year, or alternatively, a self-cert mortgage, through somebody like The Mortgage Works.

Hope this helps.

happybroker

The A&L thing is due to the fact that you have such a long time to submit accounts after your year end so could well have been self employed for 2 years 8 months but still only have 1 years accounts. It's a plus over some lenders.

If the loan to value and income multiples are very low then a good broker may be able to talk it through with a lender. The woolwich can be quite helpfull on occasion, especially if you bank with them. I ha ve just had an agreement for someone that was completely out of their criteria but held a premier account with Barclays & earned really good money so some will listen if it's a good deal for them.

Tatsky

Hi There

Thanks for the advice so far. I was a bit frustrated with Abbey, as although I bank with them, they can see my business account income etc they would not entertain 1 years accounts and a projection.

I have heard of other banks considering this.

It is very frustrating that I am working my socks off and making really good money, but the banks just wont entertain me. If I decided to wrap it in, get employed and earn half what I am now then they would happily lend to me. Someone employed can be made redundant at any time.

In the realm of common sense, me taking on a mortgage which would be less than the one I have now, on a better property would make sense.

Tatsky

happybroker

You're absolutely right to be frutstrated Tatsky. Unfortunately the banking world has been devoid of common sense for many years and this shows no sign of changing. They live in a world of extremes because the expertise and professionalism has been severly diluted over the years.

Where decisions were made by ACIB and like who really understood risk this has been stream lined so that the computer can say no...I really feel for poeple in your situation, it just isn't fair. It is, however, where we are and the Abbey are one of the worst for it. Speak to a good broker and you may well get sorted though you're not going to have the widest choice of lenders I'm afraid.

hearts

Have you asked about porting your present mortgage.

Tatsky

Hi Guys

Thanks for all of the feedback. Good news, some light at the end of the tunnel, and hopefully it isn't some swine with a torch coming to stick the boot in.

I contacted Skipton, explained the situation, I said I knew their lending criteria was 2 years accounts, but explained the mortgage I want is smaller, on a better house and I have 15% deposit as well as a little equity. The guy put me on hold for 30 seconds and came back and said we can accept 1 year and a projection. Yeah!

He spoke to the underwriters, and the fact that I am an existing customer, with a good track record they can take that into account. It seems some common sense does prevail in some corners of the world.

So, I am now on to my accountant to sort me with a projection etc and we should be away.

It's not like the projection is finger in the air. I am 5 months into this financial year, and have already invoiced 50% of what I did last year. So with 60k net last year, and 31k so far this year I should be laughing right? Oh, theres that common sense again

If you guys are interested I will keep you posted with how I get on.

Cheers

Tatsky

_Andy_

Nice work, keep us posted.

Mrs_Bumble

One for the little guy! Nice one:)

Cashwitch

Good for you - it looks like we are about to jump into a similar position (me salaried, partner going self-employed, but looking to increase the mortgage) but obviously things may take time before we can proceed.I've been umming and ahhing about contacting our lender at this stage to ask if they will increase the mortage (which is portable) given these circumstances....not sure if it's a bit early to do this though...Well done though, especially in these lean times.;)