strict mortgage company

mad_footie_lad

Hi, i am a self employed electrician but have been sub contracting to the same company for the last 3 years. As i was stilled training to become a qualified electrician my earnings were not the best.

1st year i earnt before tax - £11,000
2nd year before tax - £13,000
3rd year before tax - £16,000
4th year PREDICTED TURNOVER - £50,000

I have now qualified and in the last 4 months i have earn't £20,000 before tax, then roughly take away about £500 a month for business expenses, but my estitmated profit should over £50,000 for the year and the bank will not give me a mortgage for a house worth £92,000. i currently have one loan which i pay 242 a month but i have just finished paying another loan i had, and i have no missed payments on anything.

Anybody got any idea if theres a way around this?

Would appreciate any feedback you could give. thankyou

devotee

You have to have two years accounts with profits and the profits are your earnings used for income multiples. So of course you won't qualify for £92k house. How big is your deposit? AFAIK you need at least 25% deposit as a self employed, but could be wrong.
So the only way to get around this is to get a massive deposit, or wait a couple of years until your income reaches good levels.
Is 50k your estimated profit or turnover??? Big difference.

poppysarah

I wouldn't lend on the basis you will earn 3X more than you did last year.

betmunch

Get your forth years accounts finalised as quick as posible, until thats done, chill out and wait. Save a bit more for your deposit.

Once your forth year is confirmed as £50k net profit you shouldnt have a problem.

mad_footie_lad

devotee wrote: »

You have to have two years accounts with profits and the profits are your earnings used for income multiples. So of course you won't qualify for £92k house. How big is your deposit? AFAIK you need at least 25% deposit as a self employed, but could be wrong.
So the only way to get around this is to get a massive deposit, or wait a couple of years until your income reaches good levels.
Is 50k your estimated profit or turnover??? Big difference.

My turnover will be 65K and profit for that year will be 50K

GDB2222

mad_footie_lad wrote: »

My turnover will be 65K and profit for that year will be 50K

I hear where you are coming from. £20k earned in 4 months -> £60k t/o, less £500/mth expenses. So, £50k profit is quite likely. However, projecting forward like that from only 4 months earnings is not going to impress a lender. They may worry that your earnings are very seasonal. That's probably wrong for an electrician, but bankers are not the most imaginative. Do a full year or two self employed, you'll have saved a decent deposit, and they'll welcome you.

mad_footie_lad

It is a joint mortgage and my partner earns 11,000 a year aswell.. These previous years of not earning a great deal where my years of college and the company paid me less a wage. Now im qualified i get a better wage but i suppose the mortgage company dont look at the fact my selfemployment is gainin in profit year by year??

DVardysShadow

mad_footie_lad wrote: »

Now im qualified i get a better wage but i suppose the mortgage company dont look at the fact my selfemployment is gainin in profit year by year??

No, they look at how you are doing now and consistency over the last few years. Frankly, to go from £15000 to £50000 in a year, supported by 4 months accounts looks like you are pulling a big fiddle. It is relatively easy to bulk up 4 months accounts to make the whole year look good. Harder to bulk up a year and even harder to do 2 years.

With all respect, because I do believe you, looking through the lender's eyes, your claimed income does not look credible. Of course they will bounce you IMO - possibly this application has even put you on their radar as a poor risk for future applications.

I suggest that you save money and go back in a year with a sizeable deposit - to another lender, I suggest.

Also, I suggest you either PM the mods to get the thread moved or repost on the Mortgages and Endowments forum. The people there are more qualified to advise.