Could I get a mortgage on these figures?

PasturesNew

Just theoretically, I haven't even viewed a house yet ....

Deposit: £210k
Borrow: £40k over 10 years
Employment Status: Self-employed (since 2006)
2009-2010 Return: T/O £19k, Nett/salary £14,700

To buy: a house + annexe that could provide an income by living in one bit/renting out the other bit, in an area where house LHA = £700/month and annexe LHA = £470/month

I don't "work" at the moment, but easily could (say £15k/year, but it'd be useless on the form as I would be new there) ... I was just happy bumbling along on about £15k self-employed as I never expected to want to borrow for a house (thought I'd just write a cheque out).

So, am I easily mortgageable, on dodgy ground, or really need a wake up call?

Thrugelmir

Open your eyes, switch the light on and rejoin the real world.

PasturesNew

Cheers. That sorts that out then.

I guess I'll just have to do a bit more on my self-employed side ... I should be able to raise it this year from £14,700 to about £25k if I actually bother ... then make up the difference with some "actual working/employment" (and cross my fingers the house doesn't sell this year). More cuckoo land!

genuineplacebo

Hi PaturesNew

I thought I would try and offer a sensible response after seeing the one and only other response!

You would need a regular income to get a mortgage of any kind.

With self employed borrowers, most financial institutions would need to see 3 years audited accounts - some may take 2 years.

If you were planning on getting a rental income from the property, even just part of it, the bank may decline a residential mortgage - and a lot of lenders aren't doing buy to let mortgages at the moment, or they're very expensive.

Could you not 'just write a cheque out' and just buy somewhere with your savings that bit cheaper?

PasturesNew

genuineplacebo wrote: »

Hi PaturesNew

I thought I would try and offer a sensible response after seeing the one and only other response!

You would need a regular income to get a mortgage of any kind.

With self employed borrowers, most financial institutions would need to see 3 years audited accounts - some may take 2 years.

If you were planning on getting a rental income from the property, even just part of it, the bank may decline a residential mortgage - and a lot of lenders aren't doing buy to let mortgages at the moment, or they're very expensive.

Could you not 'just write a cheque out' and just buy somewhere with your savings that bit cheaper?

Thanks.

My self-employed accounts aren't audited. I just do it myself and bung in a self assessment form. I've done this for 2006-2007, 2007-2008, 2008-2009, 2009-2010.... most years have been £16-17k from the start (after costs).

I did a poll on what to do on the other forum, choices were to pay cash and have money left over, pay cash and have none left over ... or borrow £40k and have the income potential. And the vote came back as the £40k/income, which surprised me ... nobody mentioned "THEY'RE CRASHING, WAIT".

I don't even know how much I actually have, might be a bit more in the pot. Maybe I'll wait and see what else comes up, that I can afford. Didn't really want to borrow, to be honest... you're not "free" then are you ... not free to sit and decide to live on beans and not work for the summer, for example

I've nothing against "getting a proper job" as such, but it does suck up your entire life doesn't it.

ANY_CHANCE

For what it is worth..

I wish I had never agreed to mortgaging my house that I owned outright.

Worst decision I could have made for myself and my family.

Things would be much different now, our quality of life would be better.

If I could go back and give myself advice I would tell my self not to have a mortgage.

With no mortgage the money you earn is yours (after bills) with no worry of losing your home.

Wutang_2

ANY_CHANCE wrote: »

For what it is worth..

I wish I had never agreed to mortgaging my house that I owned outright.

Worst decision I could have made for myself and my family.

Things would be much different now, our quality of life would be better.

If I could go back and give myself advice I would tell my self not to have a mortgage.

With no mortgage the money you earn is yours (after bills) with no worry of losing your home.

Is this related to the original question?

HelpWhereIcan

PasturesNew wrote: »

My self-employed accounts aren't audited. I just do it myself and bung in a self assessment form. I've done this for 2006-2007, 2007-2008, 2008-2009, 2009-2010....

As long as you declare your income to HMRC and have the SA302 forms that you get back from the revenue then you are fine.

PasturesNew wrote: »

most years have been £16-17k from the start (after costs).

Which, if that is your net profit/taxable income figure, is more than enough to borrow 40k ... especially at that loan to value and being debt free. Lenders will queue up to lend to you.

There could be a question over the % of the property that you will occupy and the % that is being let out that will cause a problem for some lenders but it will not stop you completely.

PasturesNew wrote: »

I did a poll on what to do on the other forum, choices were to pay cash and have money left over, pay cash and have none left over ... or borrow £40k and have the income potential. And the vote came back as the £40k/income, which surprised me ... nobody mentioned "THEY'RE CRASHING, WAIT".

That's because most of the people who would hace said that are trying to buy now

getmore4less

With 4 years of accounts/tax returns showing £14k+ net, might be enough to convince a lender, perhaps you main bank, on a 3* multiple with very low LTV.

This year has only just started so you would have nothing to show yet allthough the bank would see if it has been some time with no earnings.
(whats the "normal" pattern of inputs through your accounts)


Probably worth looking at the let as 2 lodgers might get round the dual purpose building issue for residential/BTL, depends how self contained the annexe is and access from main part. Your lodgers share all common areas but in practice never do.

We looked at a house that had been spit in two but still had a door between the two bits so could be used as single property or two.)

The down side is that you would need to have some income from either rental/lodgers or work.

Bullfighter

Or you could just wait a few months until the price drops to £210k....