MSE News: Mortgage blow for the recently self-employed

brook2jack

Forgot to say if you're starting nhs normally you won't know first year income until at least 18 months plus after starting work as it normally takes that long for pcts to calculate claw back if you underperform which you certainly will do if you've not worked full time nhs.

Hold back your third to pay tax and NI and maybe 20% for uda shortfall.

It took me three years before I was on my feet as an associate and looking at our vts now would guestimate the same for you.

If you get a private job with an established list you will establish an income quicker say one year.

In short don't take on any extra financial risks if you start as an associate , it will be a while before you are on your feet.

Thrugelmir

Conrad wrote: »

The only LEGAL answer is to declare a high profit and pay a large amount of Tax (like employed people as a proportion of income).

Also self employment can require other financial committments. Personal guarantees to underwrite a commercial property lease, capital required to buy stock, cost of purchasing a franchise, capital equipment, upfront deposits for example.

Its too simplistic to compare many self employed to those who are employed and purely paid for labour hours worked.

There's more to a business than just the profit and loss account.

coldstreamalways

brook2jack wrote: »

Forgot to say if you're starting nhs normally you won't know first year income until at least 18 months plus after starting work as it normally takes that long for pcts to calculate claw back if you underperform which you certainly will do if you've not worked full time nhs.

Hold back your third to pay tax and NI and maybe 20% for uda shortfall.

It took me three years before I was on my feet as an associate and looking at our vts now would guestimate the same for you.

If you get a private job with an established list you will establish an income quicker say one year.

In short don't take on any extra financial risks if you start as an associate , it will be a while before you are on your feet.

By the time I do leave, I will have a year's mortgage payments put aside, to allow things to settle. I'm hoping to be an associate in a mixed practice but other than perusing the pages of the BDJ, have got no further than that. I already do out of hours work for the PCT and (depending on how that changes over the next year) would do as much of that as I could as well to maintain a steady income until it's all settled.

It's just our mortgage is up in 2014 and I leave the army in 2013 so I'm trying to plan ahead! We'll hopefully be paying off a lump sum at that point rather than asking for more money.

Thanks for the input!

Thrugelmir

coldstreamalways wrote: »

. I already do out of hours work for the PCT and (depending on how that changes over the next year)

Aren't PCT's are being abolished ?

coldstreamalways

Thrugelmir wrote: »

Aren't PCT's are being abolished ?

Probably but someone will have to provide emergency care, as I indicated it may change. There aren't loads of dentists who want to work on weekends/evenings without charging the premium that working in private practice would attract. The job will continue, just with a different name I expect!

jockosjungle

foreversummer wrote: »

And after he has looked at your payslips, is he going to assess the boss/company you are working for and look at the financial stability of the company to see if he is going to be in a position to continue to employ you?

Probably not but then again someone would also insure me against me being made redundant, I would unlikely get insurance against my own general optimism of my self employment or get insurance when I decide I cannot be bothered working.

foreversummer wrote: »

No of course not. I am not arguing the case for self-cert mortgages. Just sensible treatment of the self-employed based on affordability (a thorough assessment of current incomings and outgoings via bank statements) and credit rating, and not a return to the days when self-employed people had to go to specialist companies who charged high rates of interest just because they were self-employed.

There needs to be discretion by the lenders. A blanket ban on anything is very rarely a good idea.

Foreversummer

Agree on no blanket ban but what you have suggested in showing affordability isn't actually something that can be shown with a couple of months worth of bank statements. I could show my deckchair business showing a healthy return in the summer, but not winter. Is an underwriter going to claw through all the invoices and sales?

You'd need at least a years worth of evidence to show your business is solvent, and I imagine the first few months are not a good demonstration of how a business will fair. If your business slacks off in the winter, you'd need to show some evidence that it picked up again the following summer and you can afford to pay the mortgage in the summer and the winter when you might pretty much shut down.

What you are basically needing is two years accounts, or 18 months if a lender is going to audit your business from head to toe - seems unlikely so you're back to the accounts again.

DonnaKebab

How many people will get the motivation and drive to set up their own business as they get fed up with their boss and job they have, but then realise the problems they will have with getting a morgage so sticks with their mundane boring work with minimun wage.....???

cmmessenger

I'm self employed and have been for three years. Unless I get into the nightmare which is porting then I cannot see an opportunity to move over the next couple of years.

However, those couple of years need to be spent working harder than ever before and exploiting every possible business opportunity.

When I started out I had two income streams, now I am reduced to one. (I am a mechanic and MG Rover specialist)

I expect to have the proof of my income examined and whilst I do have a self cert I have always thought the concept was a bit risky.

Having said all the above though, I would love to move NOW!!!:D (Neighbours from HELL):D