Current mortgage situation for self employed first-time buyer

straightouttacompton

Hi all. Can anyone advise me on the current situation regarding obtaining a mortgage as a self-employed person? I'm looking to buy in a 6-12 months but am aware the game has shifted substantially over the past few years.

My situation:

- Self employed since 2003.
- Profit (not turnover) of around £25k per year, documented with three years of accounts by an independent accountant.
- Deposit of around £35,000.

The only substantial loan I have is for my car, which is on a three year hire-purchase and costs about £350 a month. I do have a few credit cards, but no major debts and I could pay them all off without much difficulty before applying for a mortgage if necessary. Not sure what else is relevant, but I have a clean credit rating, am in good standing with my bank, etc.

So basically.... do I have any chance? How hard will this be? Friends of mine with similar circumstances were lucky enough to buy when self-cert mortgages were common, but I've heard they're practically extinct now. Will I basically be in the same position as a regular employee with my salary and savings, or will there be numerous additional hoops to jump through and checks to encounter?

Any advice or experience appreciated

herbiesjp

You have 3 years accounts and so you will be fine getting a mortgage, that the stated income/Net profit can support.

slarty_2

I took out a mortgage recently from a similar position - self employed since 2002 with full set of accounts.

The only fly in the ointment was that my last tax year showed a distinct drop in turnover which the lender, hsbc, was concerned about. This was very worrying at the time as hsbc are renowned for being extremely picky about who they lend to.

Luckily I was only a few weeks away from the end of the next company tax year and turnover for that year was back to where it should be so HSBC then accepted based on that.

straightouttacompton

slarty wrote: »

I took out a mortgage recently from a similar position - self employed since 2002 with full set of accounts.

The only fly in the ointment was that my last tax year showed a distinct drop in turnover which the lender, hsbc, was concerned about. This was very worrying at the time as hsbc are renowned for being extremely picky about who they lend to.

Luckily I was only a few weeks away from the end of the next company tax year and turnover for that year was back to where it should be so HSBC then accepted based on that.

Thanks for that. Actually my turnover and profit has increased so probably should be ok on those grounds.

You mention turnover - I assume they took a detailed look your accounts looking at turnover as well as profit then?

Conrad

Some lenders examine the accounts but a number such as C&G merely request a certificate be completed by your accountant and some of these only require a simple profit figure.

As to how much you can borrow, well you need to actualy apply as it's the only sure fire way to know.

herbiesjp

straightouttacompton wrote: »

Thanks for that. Actually my turnover and profit has increased so probably should be ok on those grounds.

You mention turnover - I assume they took a detailed look your accounts looking at turnover as well as profit then?

Turnover can be looked at by some lenders alongside the profit, but in the main it is the NET profit figure that is used.

slarty_2

straightouttacompton wrote: »

Thanks for that. Actually my turnover and profit has increased so probably should be ok on those grounds.

You mention turnover - I assume they took a detailed look your accounts looking at turnover as well as profit then?

They wanted the last 3 years accounts as drawn up by my accountant and sent yearly to the revenu, which included t/o, expenses, dividends, and profit. In my case it was specifically turnover that they were concerned about.

I work freelance and had taken some time off to do a house renovation. Then when I went back to work I'd ended up doing some contracts that paid slightly less than usual.

HSBC had noticed this drop in turnover and asked me about it - even though the amount I'd taken out of the business that year hadn't changed as I'd built up some funds over previous years.

They had real concerns but as mentioned earlier the current tax year was ok so they let it through.

Hopefully you shouldn't have a problem with your accounts. G:):)d luck!