Self employed, new mortgage advice please...

retro-spective

Hello, we are new to MSE but need some complex mortgage advice, and this seems the best place to ask for independant help.


I have bad credit, and need to keep this seperate from my partners, as he has businesses.

His situation.

He owns a house with his ex wife, Mortgage of £212, bought for £250k. She will take all the equity when it sells, there is currently a tennant in there paying £800pm.

He has businesses, is self employed, and accounts show £30k this year, £26 last year.

He is going to be soon selling one of his businesses, and from that a £20k deposit will be for our next place.

Obv, in all his many years of home buying, self cert meant he could get bigger mortgages than the usual route. He is a brilliant saver, has sparkling credit, and has never missed a payment. He can afford the mortages.

We have spoken someone about our situation, and have been told a few various options to get us on the market again, as we have seen a property in the village we live in for £285k (we are currently renting). This sounds a lot, but where we live, everything is mega bucks unfortunately

1. We could ask the vendor if they would "gift" us part of the house sale price. So we get a valuation for £315k (its on for £325) and they "gift" us the £30k, which goes towards a deposit. We have never heard of this, is it legal?

2. Another "suggestion" is showing higher earnings. Either by doing this ourselves, or a second set of accounts. This sounds bloody risky, I know nothing about finacial stuff, but I dont want my partner to risk his livelihood. Is this illegal? I have heard of people doing this, but I am concerned.

We can actually afford a big mortgage, and are not at all a "risk" but with todays climate its difficult and worrying.

Also we were told some companies will "ignore" the mortgage on the other property without having to transfer it to BTL. How true is this?

Please dont shout me down, I need a variety of opinions on our realistic options.

Oh and the property we want to buy has commercial space that would be perfect for us, attached to the side, I'm not sure if we could get part commercial part residential mortgage, if that is better, if at all? He has 5 properties in total 4 are commercial.

We have the money saved for the stamp duty ourselves, and other fee's etc covered, its just the blimmin annual income we have issue with

Thanks!

xyellowx

your trying to get a mortgage for 30k more than the value of the property and say your not a risk? or plan B fiddle your accounts your right your not a risk more of a fraudster imo

beecher2

What's been suggested to you is fraud. Realistically you need at least a 10% deposit so if you're buying a 285 house, you need at least £28k saved. If your partner is selling one of his businesses, he won't be able to include the income from this business when it comes to getting a mortgage. You also have to take into consideration the fact that your partner is named on a £212k mortgage already. Looks like you should stay renting, and save up as you are not in a secure financial state at all, regardless of what you think.

retro-spective

The business he is selling is not making money and isn't included in his £30k for this reason, and his equity is tied up in it, we will have about £20 for the house £10k to re-invest in his other very profitable businesses (they need to grow) and we have about £10k saved.

So basically, working hard, 2 jobs for 5 years to start his businesses at 16, buying his first house at 19, and always getting self-cert for over 20 years with never a missed payment, and now people are expecting him to rent for the forseable, we have already rented for 2 years to save money. We will have quite a good lump sum, but im guessing thats not enough?!? *sigh*

A mortgage advisor gave us these options, I am not suggesting we would take them up, I am asking advice, as I have never had experience of being self employed. I was worried about it, hence posting here.

retro-spective

I've looked into gifted deposit, it seems others on here have done it, and it's legal?? Can someone tell me about this? *worried*

Annisele

retro-spective wrote: »

1. We could ask the vendor if they would "gift" us part of the house sale price. So we get a valuation for £315k (its on for £325) and they "gift" us the £30k, which goes towards a deposit. We have never heard of this, is it legal?

As long as it's declared to the lender then no, it's not illegal - but it's also pointless. When the lender works out the LTV (loan to value) they'll take the "value" as the lowest of its valuation and the price you actually paid. So, the £30k won't count as part of your deposit.

2. Another "suggestion" is showing higher earnings. Either by doing this ourselves, or a second set of accounts. This sounds bloody risky, I know nothing about finacial stuff, but I dont want my partner to risk his livelihood. Is this illegal? I have heard of people doing this, but I am concerned.

Fraud, plain and simple. There isn't necessarily anything dodgy in having two sets of accounts (there can be good reasons for doing it), but if it's done for the purpose of pretending your income is higher than it is then it's fraud.

retro-spective

Thanks Annisele, thats helpful!

Why would someone suggest the gifted deposit if it would be revoked after? This makes no sense!

What would be the MAX amount we could mortgage for the straight way. Im convinced this is the one and only way we should be looking at buying. Why would someone have 2 sets of accounts? *confused*

Bullfighter

You are willing to commit complex fraud to buy a house.

!!!!!! Does this not ring some alarm bells?!?!?

If you can't afford it.. don't buy it.

retro-spective

I am not willing! We were told these were options, I was dubious! It's not my fault if we have come across some dodgy dealer!

Can someone tell me what we could afford realistically with this sort of money saved, and this income please?

beecher2

retro-spective wrote: »

I am not willing! We were told these were options, I was dubious! It's not my fault if we have come across some dodgy dealer!

Can someone tell me what we could afford realistically with this sort of money saved, and this income please?

At the very most, £120k mortgage plus £20k deposit means you'd be looking at £140k houses. That's 4 times salary, and I don't know if that is wildly optimistic when the accounts from the year before were £26k, and he's still named on another mortgage.

A £285 house is simply not going to happen.

retro-spective

To me though, its crazy for us, as he is already on the housing ladder at £250k, when that house sells, it's going to be impossible to find anything suitable for £140k ,that would buy us a tiny flat in my area. I just don't get it, his circs are more solid now than ever before business wise.

Is every self employed person struggling to meet the demands? It cant be just us...

Im very angry house prices are so high as it is in my area, its driving people out of the place they grew up.

We will of course carry on renting if the figures dont stack up!

So the gifted deposit is not an option. The other house is likely to stop us anyway, even though our tennants are giving us a £500pm profit, and theres clear equity showing in it? Also the commercial property on the side of the place we like, you cant split the mortgage? Part residential part commercial? No?

Sorry im just going through all the details now so I can tell my partner later. How stressful.