Halifax mortgage - self employed proof of income?

p_a_u_l

Hi,

My fiancee and I are currently in the process of applying for a Halifax mortgage. We have the AIP, valuation complete and currently with the underwriters.

They have now requested SA302's...

We are both classed as self-employed, my fiancee has 3 years of accounts and has requested her last 3 years SA302's.

I was permanently employed (40k per year on leaving) until November 2010 when I left to concentrate on my limited company that I incorporated in 2008. I have 3 years' worth of accounts but I don't have SA302's as I have never submitted a self-assessment as I only started receiving taxable income or benefits until June 2011.

2010/11 accounts show a £18k net profit (retained in the business until I draw it as a dividend). My accountant has prepared a projection which is showing a 35k net profit for 2011/12. I also sent the breakdown of invoices over the last 7 months and the current outstanding invoices.

Basically I'm not sure what more I can do to show my business is profitable! I sent my P60's and final p45 confirming my taxable income up to November 2010.

We have requested 90% LTV, good credit history, 2k combined outstanding debt but we are really stressing out now as the house is a repo with tight deadlines attached to it.

Has anybody had recent dealings with Halifax that accepted just the accounts? The AIP said we needed 3 years accounts which we both have and have provided - so I am not sure why they have moved the goalposts.

Btw, we are using a mortgage broker.

Any reassurances, insight, similar experiences?

Paul

kingstreet

From Halifax lending criteria;-

If your clients have a shareholding of 25% or greater share in the company through which their income is derived, we treat them as self employed.

If client's shareholding is not 100%, there is a need to establish if declared net profit is the full 100% or client's share of profit. We require verification of 3 years income by way of SA302s, accountants reference or accounts.

For limited companies we use the combined figures of dividends plus salary drawn.

and

IIRC for self employed, Halifax use either an average of the last three years net profits or will take the latest year if it is an increase on the two previous years.

I've never known them accept any kind of projection.

p_a_u_l

Thanks for the response.

I have been over the lending criteria a few times and it matches what was asked for on the AIP. We provided three years worth of accounts for both my fiancee and myself.

The issue is they are now asking for SA302's (in addition to the accounts)....My fiancee has requested these from HMRC and they support the figures given at the application stage (and the accounts provided).

The problem is, I am being classed as self employed (which I am), I have provided my last 3 years' worth of accounts (net profit increasing) but I haven't drawn a wage until this FY therefore I have no SA302 as I have never completed a self-assessment.

I would have thought that bound accounts from our accountants would have been enough.

AFAIK, the projections were sent as supporting evidence after initial discussions with the processing team.

I was just wondering whether there is something 'wrong' with our accounts; and whether normally accounts are sufficient for the Halifax?

kingstreet

Many lenders still have problems with the concept of someone being self-employed who also runs a company.

The easiest way to deal with this would be to ask for the accounts of the company and SA302s for the individual, but this doesn't particularly suit those like you who set up a company before they really start to trade.

All I can suggest is what you already appear to have done, supply the P60 for your earlier employment and the accounts for the business. Your broker should be hassling them regularly to try to get some understanding of the position.

You could also ask HMRC to send you written confirmation of the income and tax you have declared for the last three years. Whether this comes as a "SA302" when you've made no self-assessment return I don't know, but I've certainly had clients obtain letters from HMRC which were accepted as proof of income.

Despite the recent deal between the lenders and HMRC for them to obtain instant income data, the fee of £14 appears to be putting off most lenders.

p_a_u_l

Thanks again for taking the time to reply.

I called HMRC earlier (1hr. wait due to self assessments being due) and they confirmed I have no SA302's.

I do have a P800 (which is a statement of tax calculation) so I will suggest to my broker sending that across. They have actually been very good so far, feeding back progress every day.

It looks like a continued period of sleepness nights until we get it sorted!!

Conrad

I'm afraid Halifax is probably not the lender for this one but don't dispair there are alternate avenues to explore. One reputable lender quite often only requests 1 years accounts or Tax documents. Check with your broker, he'll know the lender but be aware they do not pay broker commission.

p_a_u_l

I take it you are referring to Santander or Northern Rock?

We were using an IFA who spoke to 6 lenders and when it got down to the nitty gritty, both Santander and Northern Rock didn't like the "bumpiness" of both of our recent net profits.

We do have another option, but it means my partner going through her bank (Barclays/Woolwich) with a sole application at a higher rate 6.24% with a 3yr fixed.

We will be pretty annoyed if we have wasted all this time and money to be led down another dead end.

I suppose we'll have to wait to see what they come back with....

BoGoF

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paul.chapman wrote: »

I take it you are referring to Santander or Northern Rock?

We were using an IFA who spoke to 6 lenders and when it got down to the nitty gritty, both Santander and Northern Rock didn't like the "bumpiness" of both of our recent net profits.

We do have another option, but it means my partner going through her bank (Barclays/Woolwich) with a sole application at a higher rate 6.24% with a 3yr fixed.

We will be pretty annoyed if we have wasted all this time and money to be led down another dead end.

I suppose we'll have to wait to see what they come back with....

In that case I would work out just what it would cost you in total to take on this expensive mortgage now (or the best available) and the costs for the duration (3 years) and the costs to remortgage to better rates when your LTV has gone down and you have better accounts to show (use today's figures for costs).

If this proves your "only" option, then you want cheapness of entry and exit and perhaps you don't want a fixed rate at all. You need low fees on this and the next mortgage. So bundle all these costs together, Excel is best, and see just what works out best.

mic200202

From what you have said, it looks like you were employed 'till Nov 2010 but had the business as secondary income.So in Halifax speak you have 1 years trading under your belt.Which is where they would get nervous.Depending on how the app was keyed,the underwriting will follow.Some systems would have difficulty in allowing 2 sources of previous income to be keyed - so if the app was keyed using you as self employed for last 3 years that all they will ever look at.If it was keyed as 1 year self employed they will only ask for most recent years accounts.

If you have provided your last p60 and the SA302 for current year,thats all you can do - its down to the underwriter form here.Santander would be a poss plan b as they prefer an acountants reference which would suit you.Again,its really on the issue of dual income where one has been secondary for a period.They will work on an average of the 3 years or the most recent.

kingstreet

mic200202 wrote: »

Santander would be a poss plan b as they prefer an acountants reference which would suit you.

See post #7?

I take it you are referring to Santander or Northern Rock?

We were using an IFA who spoke to 6 lenders and when it got down to the nitty gritty, both Santander and Northern Rock didn't like the "bumpiness" of both of our recent net profits.