Refused a 10% mortgage!

chopper78

freteval wrote: »

imagine my surprise when no one will consider lending me £20,000 ie a 10% loan. Where the hell is the risk to the lender.

Maybe £20,000 is below the minimum mortgage amount?

I had a 45% shareholding in a business for 12 years and couldn't get a mortgage, so I sold the business and became an employee of the business. This resulted in me getting an improved deposit, but also involved me taking a cut in take-home pay of around £600 a month, yet the day after I sold the business, I went back into the bank as an employee rather than self employed, armed with an employment reference, and my stagnant mortgage application turned into a mortgage offer there and then.

freteval

Thanks to all who replied

Not trying to say who is better or worse, employed or self employed but have to say the motivation of a self employed family man is very high each morning to go out and get the work.

The point i would envisise is this

A £20,000 costs £235/month (2 days work)

I purchase house for £240,000 with a £20,000 mortgage
If i default the costs to the lender to reposses home and the outstanding loan would be approx £35,000. Also assume the house prices reduced by 20%. Lender gets all their money back and i get £157,000 THE RISK IS ALL MINE.

If the lender gives a 75% mortgage to someone who has been employed for 1 year as they fit their lending critera apply the same senario as above and the lender is £23,000 out of pocket

So my situation has the least risk. But because there is a blanket ban by under writers on self employed with less than 18 months books i can not get a loan even though the risk is all mine.

This is what is bonkers about the banking system

silvercar

You could get an unsecured loan for 20k. Or cash out on a credit card or an overdraft or any combination.

The headline interest rate would be higher, but you would have no arrangement fees, valuation fees, mortgage lender's legal fees etc.