Self Employed Mortgage Query

fivemice

Hello,

I think I have everything going against me to get a mortgage.

I have been self employed since April 2005 running a computer repair/services business, so have one set of accounts showing an income of £11k for me and £5k for my wife in earnings. There were a lot of start up costs and I was working part time on a fairly low income job at the time. Prior to going self employed I earnt £16k and my wife wasn't earning.

My current year is set to be a lot more profitable, approximately £36k to me and £5k to my wife (both self employed income, we're a partnership)

I have a contract with the local council that extends into the whole of next year, and I anticipate earnings of £45k to me and £5k to my wife.

I want to borrow in the region of £145k, and as it stands I have no deposit, but could have around £10k by September 07. I have done a budget and can easily afford the repayments even with a higher interest rate.

With regard to credit, I defaulted on a credit card in October 2001, and this shows on my credit file, but as defaults disappear after 6 years this will be gone by October 2007. I don't have any CCJS or other defaults, but just the odd late payment on a loan, but on the whole OK credit history since then.

My wife has good credit history with a credit card, next account, and car finance loan with no missed payments.

Can anyone advise whether:
1) I have any chance of getting a mortgage now
2) I have any chance of getting a mortgage in october 07 when I have 2 years accounts, and my default has gone from my credit file and have a £10k deposit
3) I will have to wait til I have 3 years account or a larger deposit (e.g. for self-cert)

Oh and I forgot to mention, I'm a first time buyer and fed up of paying rent!

Thanks in anticipation

MortgageMamma

I woupd say that at the moment your circumstances for buying are just not right. You dont have a deposit for a start, and your credit history is blemished, your past earnings are not indicative of what you say you will earn this year - in fact, what will your earnings this year be 36k or 45k sorry I'm confused.

There is a way you could get a mortgage at the moment, but it would be 90% mortgage and a 10% loan for your deposit, the rates won't be brillaint but it would do the job.

However I do think you would be much better waiting until that default has gone off your credit file and you have a deposit - hopefully then you will have good evidence of earnings from your council contract.

But if you do want to do it now without the deposit (perhaps unwise) then the way above is the only way. You could always look at shared ownership or the open market homebuy scheme in a couple of months once you have accumulated a 5% deposit