mortgage for self-employed with poor books??

nopottopi**in

Hello :j

A friend of mine is about to sell her flat and buy a house. She is self employed and currently has a 24k morgage as that is all she could get at the time due to poor books.

When she sells she will have a 50k deposit for a new house she wants which costs circa 150k. But... she still has very poor ''earnings'' as being self employed she constantly reinvests in her business - although her actual turnover was over 32k for both of the last 2 years (the year prior though was a loss due to buying new ''assets''). Since she is self employed she doesn't really take a ''pay'' as such but has down in her books 9k and 13k for the last 2 years although this years gross should be 35k + and ''pay" 15k+.

Could anyone please tell me if she could get a morgage for 100k with a 50k deposit? She could easyily pay £800+ a month...can a mortgage be linked to gross of business? Or are there companies that specialise in self employed people who charge high rates?

Also, none of her books have been audited by an accountant so can she even use these figures? or will no one touch her with a bargepole??

Any help much appreciated

Thanks

toonfish

the only way she can do this legitimately is on an affordability basis by self certifying her income. The "net profit" figures are generally used for lending multiples.

toonfish

Actually another option worth a try is to approach their bank and see if they have a preapproved borrowing limit. Unlikely with the figures mentioned, but worth a call first.

AndyWallace

Salary taken from a business doesn't always reflect the reality of the situation. A chat/factfind with a mortgage broker in this instance would be advised.

Andy.

nopottopi**in

Thanks for these replies, is there anyway though that she can get a mortgage based on turnover rather than take-home profit?

toonfish

nopottopi**in wrote:

Thanks for these replies, is there anyway though that she can get a mortgage based on turnover rather than take-home profit?

I'm afraid not - profit is what they are interested in

nopottopi**in

so she would need to 're-write' her books before seeking advice? you see the monies put back into the business weren't just running costs, they have been used on buying things to enhance the business and make it more profitable in the future

toonfish

there's no need to rewrite the books, as long as she can declare sufficient disposable income to service the loan.