Self employed and need to remortgage

ynwa

Hi, basically my situation is this: I've been a homeowner for two years and I've reached the end of the fixed term on my (fairly expensive self-cert) mortgage. I'm self-employed but the last three years net profits have gradually declined (nothing critical, just a sign of the times really).

Because of this santander whom I bank with, have informed me they won't even consider my application. My house is worth a minimum £120,000 and the outstanding balance on my mortgage is aprox £69,000.

Is this the general response I'm likely to receive from most banks ie. am I wasting my time ringing them and arranging visits phone calls etc? Due to my circumstances am I likely to even be able to remortgage at all?

Any help/experience appreciated, thanks.

mij544

Hi,

most lenders now will assess you properly on affordability, so the only way you can find out who will lend you what is to look at the figures.

If you can quote your last 3 years accounts then I could give you a better idea if that helps.

kingstreet

ynwa wrote: »

Hi, basically my situation is this: I've been a homeowner for two years and I've reached the end of the fixed term on my (fairly expensive self-cert) mortgage. I'm self-employed but the last three years net profits have gradually declined (nothing critical, just a sign of the times really).

Because of this santander whom I bank with, have informed me they won't even consider my application. My house is worth a minimum £120,000 and the outstanding balance on my mortgage is aprox £69,000.

Is this the general response I'm likely to receive from most banks ie. am I wasting my time ringing them and arranging visits phone calls etc? Due to my circumstances am I likely to even be able to remortgage at all?

Any help/experience appreciated, thanks.

In the first instance, I suggest you ask your current lender what deals it has available for those existing customers in your situation.

Once you know what your current lender is offering, you can then look at remortgage products. What are your last three years net profit figures? At less than 60% LTV, this shouldn't be that difficult to do, unless your income is much too low, or you have credit or mortgage payment problems?

ynwa

net profits are aprox 2008: 29k 2009: 27k 2010: 23k

No credit/mortgage issues.

Also, might sound daft, but do you know if it makes a difference if the business is a partnership?

kingstreet

If it's a partnership, you have to be careful to tell the lender how the net profit is apportioned.

For example, if the net profit you say was £23k last year and only 50% of that is apportioned to you, your income for mortgage purposes is only £11,500. That won't get you a £70k mortgage, even at a 60% LTV.

So you put the firm's net profit in and apportion it according to the split, or you put your share in and apportion it 100% to you.

ynwa

kingstreet wrote: »

If it's a partnership, you have to be careful to tell the lender how the net profit is apportioned.

For example, if the net profit you say was £23k last year and only 50% of that is apportioned to you, your income for mortgage purposes is only £11,500. That won't get you a £70k mortgage, even at a 60% LTV.

So you put the firm's net profit in and apportion it according to the split, or you put your share in and apportion it 100% to you.

Yes those figures are split on paper. I guess it's the old 'tax v mortgage credentials' argument.

So with those figures split roughly 50/50 as you suggest, am I better of trying to pursue a better deal from my current lender and waiting until either my accounts can be adjusted more favourably and/or waiting for my girlfriend who is a student to get a job and apply with me?

mij544

As long as the income you quoted is your share and you can prove it, you should have no trouble providing you have a good credit score.

I have access to Trigold (I am fee free whole of market broker) and with this loan to value and income plenty of high street lenders are on the list, including Woolwich, Natwest & Northern Rock.

For example Woolwich have a 2yr fixed at 2.98% with a £995 fee and £200 cashback.

Depends if you want to fix, and if so how long for.

Hope this helps

ynwa

mij544 wrote: »

As long as the income you quoted is your share and you can prove it, you should have no trouble providing you have a good credit score.

I have access to Trigold (I am fee free whole of market broker) and with this loan to value and income plenty of high street lenders are on the list, including Woolwich, Natwest & Northern Rock.

For example Woolwich have a 2yr fixed at 2.98% with a £995 fee and £200 cashback.

Depends if you want to fix, and if so how long for.

Hope this helps

Thanks for the info, but see above reply - unfortunately on paper my share is roughly half those figures.

kingstreet

ynwa wrote: »

Yes those figures are split on paper. I guess it's the old 'tax v mortgage credentials' argument.

So with those figures split roughly 50/50 as you suggest, am I better of trying to pursue a better deal from my current lender and waiting until either my accounts can be adjusted more favourably and/or waiting for my girlfriend who is a student to get a job and apply with me?

Yes. It's the perennial problem for the self-employed.

See what the existing lender will offer first. If you don't like that, wait until one of the other things happens. In the meantime, you might drop onto a decent reversion rate when the fix ends, or the lender's standard variable rate might not be that bad. Check your key facts illustration from when you took out the current mortgage for the "follow-on" rate details.

ynwa

kingstreet wrote: »

Yes. It's the perennial problem for the self-employed.

See what the existing lender will offer first. If you don't like that, wait until one of the other things happens. In the meantime, you might drop onto a decent reversion rate when the fix ends, or the lender's standard variable rate might not be that bad. Check your key facts illustration from when you took out the current mortgage for the "follow-on" rate details.

It was fixed at a fairly high 7.54% and from 02/06/11 it is now on a variable rate which is 5.50% above base, which will not go below a floor of 6.00% for the remainder of the mortgage.

My payments have gone down a little because of this, which takes the heat off to remortgage, but I still wanted a much better deal, but I suppose you can't have it both ways with the tax.

mij544

As mentioned above, the first port of call is your existing lender to see what they will offer you, (this is good advice on all remortgages, as you then know what you have to beat).

There are some lenders who will consider you based on the figures quoted, Saffron Waldon building society would in principle according to Trigold.

Don't forget you can include all income in an affordability calculator, as many people receive various awards and credits which lenders are willing to take in to account when underwritten.