Self Employed First Time Buyers

mattgrange

Hi, my wife and I would like to by our first house together as we are sick of paying rent! I'm self employed and only have my first years accounts (which show a loss) i'll have my second years accounts in April which should show a profit of around £25,000. My wife is employed and on a salery of £17,000.

My question is, if I were to employ my wife (as she does a lot of work for me already, bookkeeping etc) give her a permanent contract and a salery of say £14,000. Could she then apply for a mortgage based on the combined salery of £31,000??

We're looking to buy a house worth £125,000 and have £20,000 - £25,000 deposit.

GMS

If employed by a family business a lender would generally want a reference from the company accountant.

Also there will be questions asked as to how she can do 2 jobs.

Conrad

mattgrange wrote: »

Hi, my wife and I would like to by our first house together as we are sick of paying rent! I'm self employed and only have my first years accounts (which show a loss) i'll have my second years accounts in April which should show a profit of around £25,000. My wife is employed and on a salery of £17,000.

My question is, if I were to employ my wife (as she does a lot of work for me already, bookkeeping etc) give her a permanent contract and a salery of say £14,000. Could she then apply for a mortgage based on the combined salery of £31,000??

We're looking to buy a house worth £125,000 and have £20,000 - £25,000 deposit.

There are various ways of approaching this but simply employing your wife will usualy fail for a variety of reasons. For one the address she works form, if the same as the home will cause difficulties for a RESIDENTIAL mortgage and buildings insurer.

Your best bet is find a very experienced broker. Be aware many brokers are AR's, which means part of a compliance network such as Sesame. This means the network will have it's own compliance rules which are in addition to those a lender will impose and can cause unnecessary issues. You might therefore want to try a DIRECTLY AUTHORISED broker (see thier card) where only the lenders rules apply - there is no 'doubling up'.

The Sesame network broker next to me passes me some of his cases as his own network will not allow them!

herbiesjp

Why don't you wait until you have your second years accounts showing a Net profit, and then apply - April is not that far away.

Approaching the mortgage in the way you suggest will just cause you problems.

Get it right first time, but do it the right way also.

Conrad - not all networks work in the same way. Being AR or DA does not mean automatically mean being better or worse than the next broker - that distinction comes with how the broker deals with the case.

Conrad

herbiesjp wrote: »

Conrad - not all networks work in the same way. Being AR or DA does not mean automatically mean being better or worse than the next broker - that distinction comes with how the broker deals with the case.

Your right, not all networks place an over burden on thier brokers, but certainly some do.

mattgrange

Thanks for those replys, I should have pointed out that my wifes first job is only four days a week and term time only, but maybe a second salery of nearer £10,000 would be better.

If I wait till April and have my second years accounts would that be taken into account by a lender? I was told previously that three years accounts minimum would be required. Especially as my firs years shows a loss.

mattgrange

Also, as my accounts are done by my wife, would an accountant have to look at them to somehow certify they were correct??

nell53

Surely, if you employed your wife on say £10k a year, then that would come out of your profits and your own earnings would be that much less.
I'm self employed and my lender needed to see three years accounts, they then took the lowest of the three and allowed me a multiple of that. But only after they got a letter from my accountant and a lengthy letter explainaing why they my profits has dipped in 2008/9 [global financial crisis anyone?]. And I've been with the same lender for 15 years.