Self employed mortgage hell

sabina24

Hello, we are looking to remortgage our home. We only want 20% of the value in a mortgage and have impeccable mortgage history and credit ratings. However, we're being penalised for being self employed and legitimately lowering our taxable income. Even though what we have in our pocket might be considerably more than someone on PAYE banks only want to know our net profit line. Can anyone help with this? We can stay with our existing mortage providor if necessary but their rates aren't great and all the brokers are very unhelpful.

betmunch

Aside from your accounts how what other ways have you got to prove your income that are acceptable to a lender?

Unfortunately I suspect it is none.

Your accountant has done a cracking job proving you earn nothing to reduce you tax liability, however if you earn nothing you can borrow nothing.

Cant have it both ways any more I'm afraid

Let_Us_See

This old chestnut! Self empoyed mortgage hell - I don't think so! You are NOT being penalised for being self-employed, you just do not have enough income to support your required borrowing. Increase your declared income, and you can increase your borrowing. Quite simple really.

Brokers are not being unhelpful.......you just do not have enough declared earned income.

beecher2

Tax avoidance may well be legitimate, but it means that you may well not get the mortgage you feel you can afford. I fail to see how that means you're being penalised, indeed someone on PAYE may question why an individual who pays less tax has considerably more in their pocket, and might feel penalised by such a system.

CloudCuckooLand

Guns vs butter.
Low mortgage vs High tax.

Its all about choice. You can change your mind.

maninthestreet

Non-Self Employed Tax Hell! - I can get a decent mortgage, as I have no trouble proving my income level is over 50K p.a, but I have to pay loads of income tax as a result - how do I get the tax man to accept I only have an income barely more than the NMW???? It seems I'm being unfairly penalised for working hard as an employee.

chalkie99

maninthestreet wrote: »

I have no trouble proving my income level is over 50K p.a,

I feel for you - I really do!

sabina24

When you are on PAYE you are given a mortgage by a lender without having first to deduct the cost of your car, your stationery, your electricity, your business rent from your income - all of which happen when you are self employed. The lenders look at the amount left which is not enough for a mortgage. And don't worry green faces, we are paying plenty of tax, we aren't some giant conglomerate with a team of accountants fiddling the books!! We're talking piddling amounts of deductions but which pull your under the mortgage threshold.

Conrad

sabina24 wrote: »

When you are on PAYE you are given a mortgage by a lender without having first to deduct the cost of your car, your stationery, your electricity, your business rent from your income - all of which happen when you are self employed. The lenders look at the amount left which is not enough for a mortgage. And don't worry green faces, we are paying plenty of tax, we aren't some giant conglomerate with a team of accountants fiddling the books!! We're talking piddling amounts of deductions but which pull your under the mortgage threshold.

There are several ways of approaching this. One example is where some small lenders deduct certain expenses, thus raising the level of income they can consider.

Burridge60

sabina24 wrote: »

When you are on PAYE you are given a mortgage by a lender without having first to deduct the cost of your car, your stationery, your electricity, your business rent from your income - all of which happen when you are self employed.

Which if you turn it round is why a PAYE person would be aggrieved that their house, car, travel to work costs etc cant be claimed as an expense against their income and they have to pay more tax! but enjoy the ability to get a bigger mortgage?

herbiesjp

Giving the figures may be helpful.

How long have you been self employed?
How many years accounts do you have?

What NET profits do they show in those years?
What purchase price are you looking at, and what deposit do you have to put down?