Current criteria on income to give mortgage?

freddieD

To apply for a mortgage today:

1- Are certified accounts for one year only of any use?
2- Do most lenders want to see three years income?
3- Are there some that will lend you using your recent income only?
4- Will some of them accept certified accounts for the latest year and self-certified for the previous 2 years?
5- When they calculate how much they can lend you, do they use the most recent year income figure or three years average?
6- Are there lenders that can be convinced with a combination of my sources of money asbelow?

These questions apply to asking for a mortgage from reputable non-rip off lenders.

Additional information for those who need it:
Being self-employed I have had mortgages in the past, by providing self-certified income. Now I know it is not so easy. I will have certified accounts for the current year but for the previous two years I can only supply accounts prepared by the wife, who works as an accounts assistance but is not a chartered accountant, or I can provide self-certified income again? Then there is the wife's income who is on PAYE but she does not earn a lot. I have also money in the bank but I hear the mortgage companies are not interested in it for the purpose of making mortgage payments, only for the deposit. I think they do not have a box in the application form where you can enter the cash you have stashed away.

Thanks

_Andy_

There are no self-cert mortgages available now.

Thrugelmir

Every year you should receive form SA302 from the taxman. This shows your gross income along with calculated tax liability. This will provide evidence of your actual earnings to any potential lender.

A mortgage lender will base there decision on your ability to fund mortgage repayments out of income. Cash in the bank could be gone tomorrow. There's no guarantee you'll use it to repay the mortgage.

Senior_Paper_Monitor

There appears to be a little confusion here over the terms 'self cert' and 'self assessed'.

As Andy says - 'self cert' where you simply sign 'I can afford it' does not exist any more.

As Thrugelmir says - you appear to have operated under self assessment and there should therefore be SA302s available for the previous years.

Certified accounts and SA302's are generally equally acceptable to the majority of lenders as proof of income.

FraudBuster

Some reading.


Mortgage Verification Scheme launched.


https://forums.moneysavingexpert.com/discussion/3458319

freddieD

I can get the tax forms but for the mortgage company to calculate how much they can lend me, do they take the average of the last three years or just the last or current year? because my declared income during the recession was very low (previous 2 years) but now I am earning decent money.

Senior_Paper_Monitor

Varies by lender and the trend of the earnings.

Generally, if increasing as yours appears to be, it will be an average of two or three.

I get the impression that you might benefit from the services of a broker who will identify the most appropriate lender to accept your circumstarces

Thrugelmir

freddieD wrote: »

because my declared income during the recession was very low (previous 2 years) but now I am earning decent money.

That's something for you to consider. Whilst the recession may be over. The economy is far from fixed. So being self employed how stable is your income? A mortgage is a long term commitment so little point in overstretching on the back of one good year.

You referred to rip off lenders earlier. Terms on offer reflect risk. That's what they price on.

freddieD

Yes I will approach a broker when I decide to apply for the mortgage, but initially I want to see where I stand today as I have not tried to get a mortgage since before the banking crisis.

freddieD

I still think it is funny to see the attitude of lenders in relation to what somebody said above that cash in the bank can be gone tomorrow (regardless of how much you have) and their attitude towards the self-employed.
You can also have, today, a nice job in the public sector, army, train manufacturers, car manufacturers and tomorrow you start on your long term unemployment, but lenders like people with 9 to 5 jobs:)

Thrugelmir

freddieD wrote: »

I still think it is funny to see the attitude of lenders in relation to what somebody said above that cash in the bank can be gone tomorrow (regardless of how much you have)

If you have cash in the bank then borrow less.

Then you'll become a better risk for a lender.