Mortgage Advice

El_Tedistino

Hello all

I currently have a mortgage (5.99% fixed until June 2013) of £156k on my property (value £205k) which I took out 9 years ago. When I took out the mortgage I was employed by a company and on a salary of £29k.

Since then I have bought the company and so am now self employed, but my mortgage company have not been made aware of this. Last year my self employed earnings were £28k. I've never missed a payment or been late.

My wife and I are trying to sell both of our houses and move up the property ladder, buying a house for around £350k. I'm wondering if I am better off sticking with my existing mortgage and just increasing it for the purchase of my next house or whether I should risk trying to get a new mortgage on a better deal? I'm worried that I'm going to find it harder to get a new mortgage now that I am self employed.

Our combined earnings are £82k and we will have approx £60k deposit and hope to get a £300k mortgage....

What do you think?

Many thanks in advance

kingstreet

El_Tedistino wrote: »

I'm wondering if I am better off sticking with my existing mortgage and just increasing it for the purchase of my next house

The problem you feel you might have getting a "new" mortgage will be the same problem you have with your existing lender.

When you move, you are taking out a new mortgage with your existing lender too. Their status, criteria and loan to value requirements have to be satisfied just as they would with a new lender.

Speak to your existing lender, then talk to a whole market or independent broker to get all your options established.

El_Tedistino

Thank you

and is it important that I let my existing lender know that I am now self employed?

kingstreet

El_Tedistino wrote: »

Thank you

and is it important that I let my existing lender know that I am now self employed?

There is no ongoing disclosure regime from the point you complete so no, ordinarily if you were staying where you are, you don't have to tell them anything.

However, as you need a new mortgage, you will of course have to answer the questions on the application form truthfully, so if you call them to discuss the matter, you need to tell them all the relevant details so you get the most accurate information in return.

Your case overall is a good one, if you have a good credit history. The duration of your self-employment will be an issue if it's less than three years. Some lenders insist on three years' earnings data. Others need less, hence my suggestion of speaking to a broker after you speak to your current lender.

If you wish to avoid early repayment penalties on your current mortgage product, you may be able to transfer that product to a new mortgage with your current lender if you do qualify for a new mortgage with them. Any increased borrowing would be offered on a product of your choice from the lender's current range for those moving home.