Mortgage - Self Employed & Under 25

proline

Hello,

Im 23 years old and a self employed builder (now in my 3rd year). I live at home with my parents currently, i earn around £30k a year before tax.

I've been offered a house by a family friend thats in need of repair for £80k. After pricing it up, its going to cost £15k to refurb over a 6 week period. I have had 3 estate agents value what it would be worth when finished, which came out at an average of £128k. I personally think around £118-120k.

As its near to our local hospital, houses in this area never stay on the market for long, my grandfather owned one on this road that he sold in 8 weeks of marketing it (this was in november 2010)

I have a £10k deposit at the moment, is there any mortgage out there for me? Or wil me being self employed/low deposit will it make it impossible for me to get a mortgage?

Horace

Are you a member of the FSB? If so, then I think you can find out about mortgages from them because I can remember seeing a company advertise in the FSB magazine (which went into the recycling bin last week..sorry) offering mortgages for self employed people.

I think if memory serves me correctly that banks ask for 3 years' worth of accounts before they will lend money, also your deposit is low. It might be worth joining the FSB (£150 for first year for one employee - thereafter £120) because you get free insurance to cover you if the tax man investigates you and you can apply for a mortgage

kingstreet

Typically, you'll need two years accounts or tax assessments, maybe with support of a projection from an accountant for year three.

I don't see you as the problem in getting a mortgage, albeit the rate will be higher because of your deposit.

When the surveyor values the property he will more than likely hold back money from the mortgage until essential repairs are done.

If you suddenly have to bridge a retention of say £5,000 for a few weeks, would you have the additional funds to do that?

Let me give you an example;-

Price £80,000
Deposit £8,000

Mortgage £72,000 (90% max)

Surveyor says timber, damp, electrical and roofing work needed and says £5k retention until work done. At completion, only £67k of mortgage released, so you need to increase deposit to £13k to make up difference. Then you get work done and provide evidence to lender which then gets £5k retention lifted and you then get that money back.

Only other real problem is surveyor says property not mortgageable in present condition and sets 100% retention. You'd then need funds to buy the property and repair it before you'd get any mortgage money. Serious problem unless you're minted!