Morgages for the self employed

self_employed_3

How do you get on with this one? My partner and I both self employed. Him 2 years, me just 1 year. My accounts show a profit but that doesn't prove any income. What are the best lenders in our situation? Brokers haven't been too hot with suggestions either. Are the earning multiples lower for self employed?

MortgageMamma

Hi there

It really does not make any difference to how much you can borrow being self employed. If you are unable to prove your income a self certification mortgage might be the answer. This means the lender does not check your income. You MAY have to pay between a 10-15% deposit if you are purchasing your first property, but there is currently a product which may be suitable for you where 5% would suffice. I dont know how long it will be on the market for though.

BTW, income multiples are simply a rough guide, most lenders will assess on affordability.

I don't know which brokers you have been speaking to so i really cant comment on their performance, but any broker who knows what they are doing should be able to place your case quite easily!

MM

self_employed_3

Maybe we're worrying too much - you know, you just want it to be hastle free. We've got a 30% deposit, and the mortgage quote for the balance, is much less then we're both paying separately in rent at the moment. So we will infact be making a saving.

Fingers crossed for meeting on Tuesday, otherwise, I'll be back!

Thanks for your reply which has made me feel more positive :T

MortgageMamma

No problem

I'm glad I've put your mind at rest. You must remember buying a house is one of the most stressful things you will ever do so you have done the right thing coming on here and arming yourself with the facts. There is so much more I could tell you!

Good luck on tuesday, if you get no joy come back and fire some questions.

MM

AndrewSmith

Just beware of being pushed towards a self certify product which carries high entry fees. Some are as large as 1.5% of the amount you are borrowing.

With a 30% deposit you should be looking at mainstream lenders, Abbey for example, who will allow you to self certify (yes even their own intermediary online form calls their fast-track product self certify before the broker bashers jump in) with a deposit of 25% or greater. They have rates from 4.44% Tracker (not including the trashy stepped fixed / discounted rates which increase every year) so should be well worth a look.

Having said that I know nothing of your situation so Abbey may not be right for you, just a suggestion though of what is out there.

Hope this helps

Andy

self_employed_3

As my partner has old mortgage with Halifax, we are talking to them, although I have had conversations with 2 brokers, neither of them have pushed for self-certify. I mentioned to both that I wondered if we should self-certify, and both replied "not necessarily" but then didn't offer any alternatives, based on our earning multiplies (we're trying to borrow 3.5x joint).

Thanks for your input.

AndrewSmith

The Halifax have a 4.39% tracker available at the moment, as do the Nationwide. Both for 2 years.

Fees for comparison as follows:

Halifax

Arrangement fee £499 (can be added)
Valuation £300 (assuming purchase price up to £200,000)
Exit fees (deed release/final redemption fee) £175.00 + £50.00

Tied in only for the 2 years applicable to the tracker rate.


Nationwide

Arrangement fee £599 (can be added)
Valuation £285 (assuming purchase price up to £200,000)
Exit fees (deed release/final redemption fee) £90

Tied in only for the 2 years applicable to the tracker rate.


Both are good products with pro's and cons. The thing that I would be thinking in my mind though is what happens after the initial incentive period (2 years). Nationwide offer their entire product range to both new and existing borrowers whereas the Halifax are reknown for offering enhanced products to new borrowers which are not available to existing customers.

Consider also current service standards. Nationwide are snowed under in their processing centres currently, being fed business from both Branch and Broker sources. They have a backlog of about 5 working days currently on underwriting.
Halifax however are pretty much up together with things with cases being acted on the day after submission.

Any more thoughts, just ask.

Hope this helps

Andy

MortgageMamma

I've not had any problems with nationwide lately, I use the southport service centre though so it could be that

They have been as efficient as ever from my point of view. Saying that so have Halifax. I personally think if you want a tracker these are excellent, but I'm in the grab it while you can frame of mind for the RBS 4.49% fixed which should be available at least for the next few days