Self employed mortgages

robgoingcrazy

I am going to be doing 2 years re-training from September to lead to a new profession, and was looking at the option of a career development loan, then thought why saddle myself with another £300 a month outgoings at the start of a new venture, when I could maybe remortgage the house, consolidate any current debt, and actually reduce the short term outgoings of my current morgtgage by getting a fixed rate deal lower than my current mortgage, and just adding ten years on to the mortgage term (not ideal in the long term, but will smooth the couple of years while I qualify).

The snag is I am self employed. My financial adviser said there are no self cert mortgages for self employed any more so I would have to prove my income.

Due to a variety of factors (recession, my mum died last year, had to take time out of business etc) the last financial year was slightly atrocious in terms of income, but the previous two years held quite steady.

So my question is, how do lenders look at self-employed income these days? Is it the last year, an average of 3 years, or something more complex? Would they just look at the fact my income has dropped over the last year and write me off altogether?

In my favour, I have never defaulted on any payment and have what appears to be a great credit rating (applied for a new credit card recently no problems and given a generous limit). I have the house already which is worth £90-95000, currently owe £30k on it (11 years left) and want to borrow around £50k (so a LTV of about 55%). Mortgage repayments are tiny really but even if I could just remortgage the current amount I could reduce my monthly outgoings on it by £150 a month according to the calculators. My average income for last three years I would put at £17k.

What are my chances of a mortgage lender touching me with a bargepole? :eek:

Thanks for any advice anyone can offer.

_Andy_

When you say average income, is that the net profit?

herbiesjp

Just to be clear here.

Being self employed did not automatically mean having to go self-cert.

It looks like you have had verifiable income for a while so self cert would not be an option.

You should be able to find a lender willing to help.

I'm surprised your financial adviser has not looked into this for you.

As long as you have accounts or self assessment (SA302s) you will be able to look at high street deals - the mortgage amount offered will depend on the chosen lender.

Get in contact with a mortgage broker, as a financial adviser may not deal day to day with mortgages and not be up to speed on criteria/lending policy.

robgoingcrazy

_Andy_ wrote: »

When you say average income, is that the net profit?

yes, the net profit.

robgoingcrazy

herbiesjp wrote: »

Just to be clear here.

Being self employed did not automatically mean having to go self-cert.

It looks like you have had verifiable income for a while so self cert would not be an option.

You should be able to find a lender willing to help.

I'm surprised your financial adviser has not looked into this for you.

As long as you have accounts or self assessment (SA302s) you will be able to look at high street deals - the mortgage amount offered will depend on the chosen lender.

Get in contact with a mortgage broker, as a financial adviser may not deal day to day with mortgages and not be up to speed on criteria/lending policy.

Cheers - have given FA the figures and waiting to hear back. Maybe he is looking into it as I speak but I wanted to get some extra opinions on it.

Your answer is useful, thanks.

robgoingcrazy

Ok, my FA surprised me by saying... It might be worth trying my current mortgage company first, to see if they will extend the loan amount and term.

I can see how that would make sense, as they would then keep my business, etc, and we already have a relationship. It didn't seem like the FA was keen to get me applying for a new mortgage where he would get commission on it, so it seems like advice that didn't even benefit him.

Just wondered what anyone thinks. Will morgtage lenders generally renegotiate like this?

I am with Santander - to date the only company who have ever refused me credit (a short term business overdraft a few years ago, despite never having had any problems with them or anyone else)... hopefully that was a one off.

Also, would I be better off phoning them, or heading into a branch to discuss this?

Many thanks in advance.

robgoingcrazy

Talking to myself here, but here goes...

I phoned Santander, and basically they only take into account the last year's income. And basically laughed when I told them what it was.. On that basis I am screwed. My mum died last year and it wasn't a good year. Guy said it doesn't matter if I had 3 good years before that, they don't take an average, as my FA said they do...

So FA was what they were willing to do for me, though I may have been a victim of getting through to department x which only deals with issue y. He said he couldn't advise me, if I wanted advice I should go in a branch. I have emailed my FA and maybe I will try going in some branches.

He also said I can't borrow to fund my course as they can't lend money on business expenses. Ironically, I posted a while ago to moan that I couldn't claim tax relief on my course, as the tax man says retraining ISN'T a business expense. They really do screw you all ways.

I am living up to my username just now :mad:

All I want to do is retrain to ensure my future income, and use my equity in some way to do that. Is it really going to be impossible?