1st Time Buyer - Self Employed

marcus2704

Hi,

Today I found a flat which I am interested in purchasing. I live in an area where the majority of 1 bed flats start at 150k+, however as this flat is in dire need of repair its on the markey for 110k.

The problem I have is twofold - first, I only have a 4k deposit, so would have to look at offers of above 95% LTV so I expect this would attract higher rates. I could lend the money to a CC and get to around 9k but I didnt want to go into a MG with other notable debts as I know its going to be difficult as it is.

The second problem, is that I left permanent employment a year ago (I work in IT) and after a year or so of contracting using a umbrella company, I have now formed my own Ltd company. I have heard that lenders do not like the self employed, despite (as is my case) I am now earning more than I have done before through going SE.

In terms of figures, the property is £100k, whilst my current contract is a gross figure of 39k not including overtime.

I have an appointment with a MG advisor next weekend, the property has been on the market for months however the owner refuses to go below 110k. Basically, am I helpless without a larger deposit, and is my being SE likely to impact the lending process?

Thanks for reading

tomstickland

I'd take your time. Make a lower offer and let the vendor stew for a bit.

Meanwhile research what mortgage you could get. Go and see a few advisors if you can and make sure at least one of them is true all of market.

MortgageMamma

Are you the only shareholder in your Ltd company?

Its very likely that you will need to self certify - but from my perspective I don't think its the right time for you to buy, you only have a tiny deposit, you are newly self employed, and there's a lot of work needs doing on the property. If this was one of my clients, I'd be telling them to put the breaks on untill they have a 20k deposit. If you are bringing in 39k a year without overtime, thats not impossible for you to achieve quickly say within 18 months.

marcus2704

I am the only shareholder, the nature of what I do makes it somewhat worrying as potentially I could be jobhunting every 3 to 6 months, worst case scenario is that I move back to one my parents flats and rent this one out.

Doing the flat up isnt a real concern for me, its a modest size and a few licks of paint and new flooring would instantly do wonders. The lack of a bigger deposit is a concern though, as were I to wait until I have say 15-20k saved (assuming Im in constant employment) I could be looking at 15+ months by which time property value could well of gone up considerably, making it even harder than it is now.

Very few places in this area are so cheap as this, its in a good location with easily walkable links into the town centre and mainline train stations and I would be confident of renting it should I be unable to afford to live there myself for whatever reason, and to me it seems to be a good first step on the ladder so to speak. I feel that if I leave it, Ill miss out, and face an even bigger struggle afterwards

grey_lady21

There is a specialist broker for IT contractors who (search the IT Contractor forum) could help you, alternatively your accountant may be able to point you in the right direction.

hth

MortgageMamma

marcus2704 wrote:

I am the only shareholder, the nature of what I do makes it somewhat worrying as potentially I could be jobhunting every 3 to 6 months, worst case scenario is that I move back to one my parents flats and rent this one out.

Doing the flat up isnt a real concern for me, its a modest size and a few licks of paint and new flooring would instantly do wonders. The lack of a bigger deposit is a concern though, as were I to wait until I have say 15-20k saved (assuming Im in constant employment) I could be looking at 15+ months by which time property value could well of gone up considerably, making it even harder than it is now.

Very few places in this area are so cheap as this, its in a good location with easily walkable links into the town centre and mainline train stations and I would be confident of renting it should I be unable to afford to live there myself for whatever reason, and to me it seems to be a good first step on the ladder so to speak. I feel that if I leave it, Ill miss out, and face an even bigger struggle afterwards

I really think this is the wrong time for you. you shouldnt be contemplating borrowing over 100k if your source of income is not secured. I know what you are saying about renting, but there would likely be a gap period before you can get tenants in, also a landlord has a lot of responsiblity to his tenants, which, (assuming there is not a lot of surplus once the mortgage has been paid) if without a regular income then I still don't see how you could meet these resposibilities.

I know this is not what you want to hear but I would think long and hard if I were you. You might want to run this past a reputable mortgage broker - get a second opinion