Self employed income formortgage calculators

Eveil_H

We've just had a very odd conversation with the Woolwich.
My husband is self employed and has been for some 20 years. We are looking at buying a new house. House is 430k we can put in 280k ish and are looking to borrow between 125 and 150k.

Rang Woolwich - our existing mortgage supplier - who told my husband that they would only use his income AFTER:mad: tax to assess his suitability. He asked them if that is what they did for PAYE and they admitted that they took the gross salary amount into consideration.

We went through this several times to check we hadn't misunderstood. Surely they meant net taxable income i.e profit from self employment before tax. No, they said. Definitely net income after tax.

They then banged on and one about an SA302 Tax return. We spoke to HMRC who told us we wouldn't have an SA302 unless we or they had chosen to make an adjustment. We have several years' worth of SA300s.
But that doesn't show earnings, only tax payable which in any case isn't the whole picture because of payments made on account.

Anyone else having the same problem? Is this new? Or is the person we were speaking to a half wit?

herbiesjp

Lenders will look at NET profit if he is a sole trader.

leveller2911

Sounds like discrimination to me. It should be either based on NET income for PAYE and self employed or Gross income for both.

It amazes me how they think someone employed for say 4 yrs is in a more secure position than someone who is self employed and been trading for 25 years....No doubt someone will say its all based on statistical evidence .......

Eveil_H

herbiesjp....yes but is that what I would call his net profit i.e earnings less allowable business expenses but before tax or net income (which is what the Woolwich is saying) i.e net profit less tax?

Let_Us_See

It is an observed fact that Woolwich call centres employs muppets - ask any mortgage advisor! Phone then four times and you will get four different answers.

Proof of income for self-employed differs from lender to lender and you have not stated if he is sole trader, partner, director etc. If sole trader most lenders will accept net company profit, but if partner or director lenders may only accept drawings and/or dividends.

How does you husband complete his tax returns - accountant or Self-assessment? I believe you are a little confused as SA302 is the self-assessment annual tax return and SA300 a staement of account.

Pop into your local Barclays bank and ask for the current self-employed income criteria - at least you will be able to have a face-to-face conversation!

Eveil_H

Halleluja! So the problem was that we were talking to half wits!!!!
They did, as we suspected, want net profit not net income.
But how worrying is that they have people working for them as TEAM Leaders who don't understand the difference? AND that they insisted they needed paperwork that most self employed people won't have unless they or HMRC has adjusted a paper return?

happybroker

Eveil_H wrote: »

Halleluja! So the problem was that we were talking to half wits!!!!
They did, as we suspected, want net profit not net income.
But how worrying is that they have people working for them as TEAM Leaders who don't understand the difference? AND that they insisted they needed paperwork that most self employed people won't have unless they or HMRC has adjusted a paper return?

it's incredible isn't it? Believe me Woolwich aren't the worst either.