Self employed mortgage hell

Thrugelmir

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.

Then increase your turnover, thereby increasing your profit. Isn't that why you choose self employment in preference to being on a payroll.

Let_Us_See

You are incorrect when you state PAYE borrowers do not have their existing financial commitments taken into account. Gone are the days when lenders calculated borrowing as multiples of gross income. These days mortgage 'affordability' is calculated using net monthly income and all existing financial commitments (bank or car loan, credit cards balances not cleared monthly, maintenance payments, school fees etc.) are all taken into account and deducted from net monthly income.

This is exactly the same as your situation where the lender will accept your self-employed annual net income, and then deduct any existing personal financial commitments to achieve a net personal income for mortgage purposes.

You are not being penalised, and the employed do not enjoy any preferential treatment. As previously stated you need to increase your earned income to achieve your borrowing requirements.

InMyDreams

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.

I may be wrong, but I don't think you *have* to do this either. This is your legitimate choice, to reduce your tax burden. PAYE people don't have this option.

There is no penalising going on. Both PAYE and self-employed people can only take out mortgages based on their declared (and therefore taxed) income. The self-employed, however, are much more able to legitimately manipulate these figures (in either direction) to their advantage.