Advice Sought - First Time Buyer - Decent Income, self Employed.

Jimbo333_2

Hi,

I know I can contact an IFA/my bank, but I'm after some advice here first, if at all possible.

I'm 28, and looking for my first property. From doing some research, the price band I'm looking at is £125k - £160k (quite wide, I know!).

I'm "self employed" in that I'm an Engineering contractor (white collar, degree qualified, professional engineer). I currently earn between £800 & £1150 per week (that's gross, but my net % is high). My average earnings over the past 6 months have been over £3000 per months NET. This will only increase in coming months (busy project at work). However, I have no job security, just my ability to find a new contract fast.

My employment history show periods of decent/high paid jobs (contracts) mixed with short spells of unemployment (2-3 months here and there) and a bit of travelling (1x 12 months, a few 5-6 weekers).

My gf (soon to be wife) earns about £7.5 pa (gross pay, & stable perm job). This is likely to jump to over £25k within 12 months (same situation, same industry as she is currently in).

£10k deposit so far, increasing all the time. Could maybe extract as much as another £5k from somewhere if absolutly essential.

Student loan payment £80 p/m (3k total i think). bank loan £180 pm, (£5k left). Personal Pension £235 p/m. No dependants, no credit cards, no flash lifestyle. Seriously considering upping payments on these loans to clear them faster.

My mortgage questions are thus:

1. Am I likely to be offered a mainstream bank mortgage at a decent rate?

2. Will I HAVE to go self cert? And if so, is this a lot more expensive repayment wise?

3. Will I have to go through my employemnt history in detail, pulling up every single weekly payslip, going through my complicated payment arrangments (contractors tend to use "tax efficient" payment options- I've done composite co's, been a director of my own ltd co, etc).

4. Is the amount of money we're looking for low or high considering our situation?

5. Are we better off waiting till gf gets her £25k job perm job? (while watching house prices round here skyrocket).

6. Any way of saving tax by paying mortgage with untaxed money/making the house purchase my pension plan/etc?

7. I'd like the mortgage payments to be as low as possible, so that we can ALWAYS meet them easily. We would then want to drop lump sums in, when we felt our savings were high enough, or I had a longer term contract. To this end, should we consider interest only, and then "top up" the payments yearly, moving to repayment mortgage in the future? Is it easy to switch between?

The logic in only wanting to borrow £150k max is so that if I am out of work for a few months, we can pay the mortgage out of my savings (I currently save over 50% of my income). When my gf gets her promotion (yes ,we can rely on this, its just a question of time) we should be able to live off her income (just) and bank all of mine for a rainy day.

Think I've said enough for now!

Thanks in advance for any help received.:T

Jim.

Jimbo333_2

Anyone?

TIA

Epiphone

Your best bet is to speak to a mortgage pro but you shouldn't need every payslip. Your last 3 P60's should do. Get a reference letter from your accountant though.

anthonychipp

These guys will be able to sort you out I would think:

http://www.contractormoney.com

Deemus

Just to add my personal experience, I am self employed and took out a self cert mortgage about 18 months ago, mine was fixed for 2 years at 5.29% with UCB Home Loans (owned by Nationwide). I didn't have to show any proof of earnings at all, just a minimum 15% deposit. Granted it was too easy to get credit but your current and hopefully future earnings are plenty to cover the loan you are considering.

Your problem with a self cert will be finding the deposit (an IFA should ask why do you only have £10k saved with your earnings!) , you are 10-12k short at the moment but then you should be able to save quickly on your current earnings and with a following wind you could pay that mortgage off quickly as well!

Seek professional advice but be careful not to be convinced that you must compromise in a big way on the rates available to you because you are self employed.

Jimbo333_2

Thanks everyone.

That http://www.contractormoney.com was useful - they have a loan amount calculator for contractors.

Also very good to hear other peoples experiences.

I'm seeing the bank on Friday (probably a waste of time) and am phoning the families IFA to arrange an appoinment asap.

I'll repost if I find any info that might benefit others.

In the meantime, I'll get saving!