self-employed -how to find out who will lend me money without ruining credit score??

NEH

VIGILANT22 wrote: »

Not true about it being more difficult...This would be discrimination....Employed and self employed are treated the same, as long as you can prove income
True....no self cert....

Well there is a few of us in the same boat and we were all told at some point in the last year or so that we had to have a bigger deposit at least.. So 45 % does make it harder. If you are saying that you can get away with a 20% odd deposit can you let us know which company do one so we know for future when my husband starts earning again...

VIGILANT22

Any lender...I really don't know where this info could have come from???....see a whole of market advisor they will keep you right.....you will have to be able to prove income and you can qualify for the same mortgage as anybody else!!

NEH

VIGILANT22 wrote: »

Any lender...I really don't know where this info could have come from???....see a whole of market advisor they will keep you right.....you will have to be able to prove income and you can qualify for the same mortgage as anybody else!!

We've consulted two already, one a good friend and one we saw professionally both qualified financial advisors....

VIGILANT22

I cant undertsand then, in all the years I have never heard this....look at any mortgage application form and it asks you are you employed or self employed etc......instead of submiiting payslips as proof of income you submit your tax returns....

stuart2588

I would also advise going to see a whole of the market mortgage advisor.

Me and my partner are in same boat with me being self employed and we are ftb.

We went to an independant mortgage advisor that is a friend of ours and she has gave us a long list of lenders that we could apply for a mortgage with. I was going to use tax returns but an accountant can draw up accounts for you from past tax returns if you have all the records.

This is what we have decided to do.

stuart2588

Forgot to say that we also went to an independant mortgage advisor that told us we couldnt get a mortgage. We later found out that he wasnt a whole of market advisor

HelpWhereIcan

The main issue for the self employed is the type of proof of income a lender will accept.

The most important thing is how long you have been trading - you have 5 years' figures so that will satisfy most (if not all) lenders.

You then have the issue of how the lender calculates your 'useable income'. The most problematic thing related to this is how many years the lender will average your income over.

e.g. If your last 3 years show a net profit/drawings/director's remuneration of £30,000, £20,000 and £15,000 a lender could calculate your useable income as:

The most recent year: £30,000
Average of last 2: £25,000
Average of last 3: £21,667

Some lenders would need to be ruled out if you need them to use the most recent figure (or harder still a projection to show the current year's performance). Things are complicated further if you have seen a drop in any of those three years (especially the most recent).

You then potentially have issues if you need them to use retained profits, add back in depreciation etc etc.

As you have hinted there can be an issue with some lenders if you self assess rather than use an accountant. Most lenders will accept SA302s from the Inland Revenue but some lenders are very prescriptive at the moment with regards to what they will accept and are insisting on an accountant's certificate or reference. The way round that is to employ an accountant to review the figures you have provided to the revenue and provide a refernce based on that (one or two lenders will still have a problem though as the accountant will only be able to confirm that they have just been appointed and are given figures based on information provided by you about previous years)

With 5 years' history you should be able to get the majority of deals available (providing the figures are consistent and increasing or level), potentially up to 85% or 90%.

However, it is simplistic to say that the self employed do not have issues if they can prove their income.

As far as finding out who will accept your application, I would argue that a Whole of Market adviser is the best place to start. However, I would be very wary of anyone who mentions a 45% deposit to someone with 5 years' figures.

VIGILANT22

stuart2588 wrote: »

Forgot to say that we also went to an independant mortgage advisor that told us we couldnt get a mortgage. We later found out that he wasnt a whole of market advisor

Look, if you wanted to apply to Nationwide, Halifax, Northern Rock etc today you could.....it makes no difference as long as you can provide 3 yrs accounts just as an employed would be asked for 3yrs employment history etc......

NEH

HelpWhereIcan wrote: »

The main issue for the self employed is the type of proof of income a lender will accept.

The most important thing is how long you have been trading - you have 5 years' figures so that will satisfy most (if not all) lenders.

You then have the issue of how the lender calculates your 'useable income'. The most problematic thing related to this is how many years the lender will average your income over.

e.g. If your last 3 years show a net profit/drawings/director's remuneration of £30,000, £20,000 and £15,000 a lender could calculate your useable income as:

The most recent year: £30,000
Average of last 2: £25,000
Average of last 3: £21,667

Some lenders would need to be ruled out if you need them to use the most recent figure (or harder still a projection to show the current year's performance). Things are complicated further if you have seen a drop in any of those three years (especially the most recent).

You then potentially have issues if you need them to use retained profits, add back in depreciation etc etc.

As you have hinted there can be an issue with some lenders if you self assess rather than use an accountant. Most lenders will accept SA302s from the Inland Revenue but some lenders are very prescriptive at the moment with regards to what they will accept and are insisting on an accountant's certificate or reference. The way round that is to employ an accountant to review the figures you have provided to the revenue and provide a refernce based on that (one or two lenders will still have a problem though as the accountant will only be able to confirm that they have just been appointed and are given figures based on information provided by you about previous years)

With 5 years' history you should be able to get the majority of deals available (providing the figures are consistent and increasing or level), potentially up to 85% or 90%.

However, it is simplistic to say that the self employed do not have issues if they can prove their income.

As far as finding out who will accept your application, I would argue that a Whole of Market adviser is the best place to start. However, I would be very wary of anyone who mentions a 45% deposit to someone with 5 years' figures.

Thanks for that info at the time we didn't expect the recession to happen and so things went pear shaped which is why we won't be buying again for the forseeable future but it is good to know that things are better than we thought....OH's business is a young un and therefore if what you say is true we should perhaps look to buying again in over 5 years time (business is currently only a year and half old)...only problem is if when OH is earning again whether it will be a continous income in which case we may be back to a larger deposit...

but thanks i think you may have given us some hope...

HelpWhereIcan

NEH wrote: »

OH's business is a young un and therefore if what you say is true we should perhaps look to buying again in over 5 years time (business is currently only a year and half old)...

You should be able to get 'standarda' deals with a 10 - 15% deposit once you have two years' accounts - although three is better. It is unlikley you would need to wait for as long as another 5 years.

NEH wrote: »

only problem is if when OH is earning again whether it will be a continous income in which case we may be back to a larger deposit...

but thanks i think you may have given us some hope...

Fluctuating income is not an automatic no-no. It is one of the features of self employed life. However, if the business shows declining profits you will need to expect the lender to look more closely at any application from you.