Self Employed Mortgages

bigbadandy

My wife and I are existing customers with the Nationwide. I am employed and she is self employed (sole trader). We need to include her income in order to raise the income we need to move house. She has been self employed since December 2009.

We went to see someone from the Nationwide today and they said they normally require 3 years of account to grant a mortgage to a self employed person, but since most of the mortgage will be based largely on my income and we're existing customers there should be some flexibility.

She still needs to show 12months of accounts from the her first financial year of trading and this is where the woman at Nationwide got a bit hazy. My wife will be submitting her accounts to the Inland Revenue i.e. Dec 2009 to March 31st 2010 in February 2011. This is only 4 months of accounts. The amount earned in this period would still give us the lending we need, but these accounts will not show a trading history of 12 months.

I understand a company can have its own financial year, so can we use her financial year (say we make it Dec 09 to Dec10) and get the mortgage in January 2011 or will be have to wait until she has submitted 12 months of accounts to the Inland Revenue i.e. in April 2012 for the financial year April 2010 to April 2011?

Are there a few options?

casperlarue

OH and I applied to move our One account facility to a new property, we didn't want to borrow any more money just move it across. We've been with them for 9 years. One Account wanted to see the last 3 years accounts from my husband and they chose the lowest of these 3 years to base our application on.

Just my experience, it may be worth you going and meeting with them to explain your situation.

angelsmomma

I have been with them for over 20 years with a good credit history but they still refused to give me a mortgage without 3 years accounts.
I just went elsewhere in the end.

snowlady07

One Account wanted to see the last 3 years accounts from my husband and they chose the lowest of these 3 years to base our application on.

Do lenders usually assess SE income on the lowest of the three years of accounts, or do most go for an average over the three years?

Crinz

snowlady07 wrote: »

One Account wanted to see the last 3 years accounts from my husband and they chose the lowest of these 3 years to base our application on.

Do lenders usually assess SE income on the lowest of the three years of accounts, or do most go for an average over the three years?

Really varies, depending on the business it is usually taken as an average but in certain industries the recession hit harder and lenders can sometimes take a projection of future earnings from an accountant if it acn be shown that the last few years were out of the norm.

casperlarue

snowlady07 wrote: »

One Account wanted to see the last 3 years accounts from my husband and they chose the lowest of these 3 years to base our application on.

Do lenders usually assess SE income on the lowest of the three years of accounts, or do most go for an average over the three years?

Both First Direct and One Account told me our application would be based upon the lowest of the last 3 years earnings; it used to be an average of the last 3 years but mortgage lending is really tightening up lately.