Being self employed is rubbish sometimes.

fivemice

Sometimes I wonder why we ever bothered to go self employed.

My Dad has offered to be guarantor for us (or be the main applicant if they don't offer a guarantor mortgage). Found out last night that the new job he took on meant a £10K paycut :eek: so he earns £28K and not £38K like I thought. Circumstances mean we can only go for a 3 bedroom house with a decent catchment school and we're looking at £125K-£135K. Of course we could go for something cheaper but the costs in terms of education are nothing an option I'd go for and would prefer to rent.

My husband and I are self-employed and as of last year we have a taxable income of £11k (so only one years accounts and only £11k on it because we had lots of starting up costs, frustratingly we actually earned more like £36K). This tax year (ending Apr 07) we will be able to file a return of £36K profit, having earned £45K).

But as far as I know, nobody will take our one years into account, but I can't prove the second year just yet, and most places want three years accounts.

This house buying malarkey just gets more and more complicated the more we get into it.

Here endeth my whinge

toonfish

you could consider self-certification if you can come up with a suitable deposit

fivemice

Oh I know, but you tend to need about 25% deposit and we'd probably have three years accounts by then.
I'm mostly frustrated because the bank (who we would get the mortgage from) can see the money going in every month, and we actually have £1500 minimum per month that would could afford to spend on mortgage repayments.

I'm sure we'll find a way though.

herbiesjp

There are lenders that will take your first year figures along with an accountants projection for year two.

Self cert should only be looked at as a last resort, if there is the possibility of getting cheaper "standard" rates.

What kind of deposit do you have?

dunstonh

going off topic about why you wonder about self employed. You are also aware that being self employed also means you only get the basic state pension and not the second state pension. That can halve your state pensions entitlement to £4381 a year. Live on that!

don't respond as it takes you off subject (if you do want to discuss, start a thread in pensions section).

back on topic, you can see the mortgage advisers have some solutions available and you may find that seeing a whole of market mortgage adviser would be more beneficial than seeing actual lenders which is what you appear to suggest you have done from your post.

fivemice

I'm 21, I doubt there will even be a state pension by then!

Think we will go to a whole of market MA, but my Dad is very keen to go with Natwest as he has banked with them from the start, always had mortgages with them etc.

But, I guess if they can't give us what we need then we'll have to wait or go elsewhere.

herbie - no deposit as Dad only told me he would be guarantor/main applicant for me on Monday. We could get about £10k by September but we really don't want to wait that long, especially with possible rate rises between now and then.

Toon

Yeah, I thought i would have problems but luckily I should have the 25% deposit after I sell my house which means i don't need to go and prove my income. See, the problem with me is that I only take out what I need to pay bills etc and the rest of it goes straight back into the business. So although Ionly paid myself so much, I could have paid myself a lot more!

fivemice

Ahhh - we're first time buyers as well. Could anything else go against us?

We don't have adverse credit so I guess that's something.

It's just annoying earning so much more than we would do if we were employed, yet not being able to get a mortgage.

Maybe one day some banks will go on what you actually earn rather than making it so darned difficult.

Thankyou all

dunstonh

Maybe one day some banks will go on what you actually earn rather than making it so darned difficult.

Most of the lenders do look at affordability than multiples. The difficulty you have is 1) no track record 2) no deposit 3) limited period of income that you can prove.

Being successfully self employed generally means that you earn more than an employed individual and pay less tax. The downside can be that if the accountant is using various allowances to reduce your actual income for tax purposes, it can work against you as it appears you cant afford the mortgage as the accounts are saying you earn one thing and you are saying you earn another.

herbiesjp

fivemice wrote:

Think we will go to a whole of market MA, but my Dad is very keen to go with Natwest as he has banked with them from the start, always had mortgages with them etc.

Wise move about the MA.

Why go to your father's bank? Who do you bank with - is it Nat West also? They may be able to help assuming they do 100% mortgages

fivemice

Yes we also bank with Natwest. Natwest seem to do quite a good deal for us according to moneysupermarket. As my dad is offering to be guarantor (of sorts) I feel reluctant to start telling him who he should go with if he is satisfied with Natwests service.

I'm hoping Natwest will be able to offer slightly more, as they will be able to clearly see that money regularly goes into my account, and that we are both loyal customers.