Self cert remortgage - Trapped !! need advice

standingonmyown2feet

As a self employed person and have been for many many years, we took on a self cert mortgage 7 years ago, we have never missed a payment ever, and have a perfect credit rating.

We dropped onto interest only when we started our family who a are still v young, now with all of the changes that have been made to self cert and the changes in economic time, life has got tougher out there for everybody.

So knowing our fixed rate ends this July, we said time to make life decisions, we either sell up and downsize now and take the foot off accelorator now or we fix into a good rate hopefully whilst the interest rates are low. (all those lucky peeps on 0.5%)

So called company UCB, and our 5.9% ends soon, been told we have no options but.

1, If we go onto variable it is 6.09% (!!!!!! thats 5.5% over base !!)
2, If we fix it will only be on a 5.99% with a £2K fee
3, we can't sell because we will NEVER get a new mortgage and can't use the same mort, we can only port to an equally priced house (pointless !!).

Yes we have personal debts (well business but in our names being directors) so by downsizing we could have cleared them, but we will leave ourselves homeless !!.

And if we stay on a self cert the banks know there are no other options so they can charge what they like for being self cert.

So, help please if anybody has similar experience or can offer some good advice.

My thoughts are to trash my credit rating by getting the banks to sort out payment agreements for our business/personal debts, whats the point in having a good credit score if you can't do anything with it?

Or sell the house pay everything off and become a renter.

I am not sure that I want to live with the expectation of always being charged a higher rate than the rest of the population, life is always full pelt as it is, no time for holidays and no time to go slower with this mortgage...

Help I feel trapped

ACG

You dont need a self cert mortgage.
Are you a ltd company or self employed?

Either way presuming you have accounts you should be able to get a mortgage. You need to show between 1 and 3 years accounts depending on how much you percentage wise you wish to borrow.

dunstonh

We dropped onto interest only when we started our family who a are still v young

That is not the action of someone with strong finances.

So called company UCB

That is a lender to high risk borrowers.

1, If we go onto variable it is 6.09% (!!!!!! thats 5.5% over base !!)

That reflects the risk of lending to high risk borrowers and the cost high risk borrowers have to pay.

have a perfect credit rating.

So, how do you explain the above?

My thoughts are to trash my credit rating by getting the banks to sort out payment agreements for our business/personal debts, whats the point in having a good credit score if you can't do anything with it?

May as well cut off your legs whilst you at it and try and get some compensation for that if you think self harm is in your best interests.

If I turn off the cruel to be king style response for the moment, you need to look at why you are in this position. Why are you with a high risk lender? What are you paying high risk interest rates? Why do you think you need self cert (do you need to lie about your income or can you show it)?

You may need a reality check and understand that your finances are weak and that is why you have what you have. Or it may be that you haven't explored the right options. What has a mortgage adviser told you with regards to your options?

standingonmyown2feet

Ltd company, but we have shown a loss in the last 2 years of trading as we quickly changed our business dynamic to accommodate the economic changes in order to "survive", so our bookwork no longer looks good.

For last 2 years we have not been taking dividends either, as any drawing are being offset against a large directors loan account, so again it does not look "right" for mortgage companies so can't change onto any other types of mortgage...

standingonmyown2feet

Okay let me back step:

When we started our company 10 years ago, we had a very good profit, a very healthy company and very low risk and were looking to move house, at that time the mortgage advisor advised us that because directors of the company and we had 3 years of good book work that we would need a self cert and thats how we moved to our current house 7 years ago.

It was UCB that became our mortgage company at that point.

WE dropped onto interest only when we started our family (I did advise that) because as is NORM it becomes almost impossible to give birth and run a business at the same time, but I did go back to work 3 days after having both of my children, goodness knows you can't have maternity leave when self employed.

I dont forsee how we can SUDDENLY become high risk, when we own a 3rd of the house and have never missed a payment on anything in our lives (dont think we have even had a red letter ever) yet now we are hitting brick walls with options.....

Really Dunstonh thats not very constructive advice if you are a mortgage broker I would have though you would have appreciated the sudden loss of options for self cert customers, even when they are deemed "good customers"

standingonmyown2feet

Lets put it another way:

If I had worked as a manager at Game or woolworths for 3 months and could have produced 3 wage slips then I would have got a damn good deal on a mortgage.

Yet because I work my butt off and I am self employed, I am classed as more of a risk that somebody who is paid by somebody else??? hows that logical?

Its as though I am being told to give up on by business, and go get a "proper job" so I can make a move in life....

All I am hopeful of, with this thread is other peoples experiences to see if there are other options out there that I am just not aware of yet.

At the end of he day I have to do the right thing for my family....had I chosen to sit on the dole all my life I would not even be having these life issues my rent, council tax and just about everything else would have been paid for me, but i'm not that kind of person, I am just trying to be responsible and trying to make it work with the only tools I feel that I have available to me at this time.

ACG

There are 2 lenders that would consider you for a re-mortgage with just 1 years accounts (as you owe less than 75%).

Im not sure how feasible it is but you could do with getting your accounts in order to show you taking a wage (enough to support the mortgage), it means that for a year or so you might be stuck with the rate your on but atleast there is light at the end of the tunnel.

Also interest only mortgages are very hard to get now.

On a side note (i wasnt advising when you took out your mortgage so i might be wrong), you have been advised to take out a high risk mortgage when your paperwork (going off your post) was fine and would probably have supported a standard mortgage. If you were advised to take out a higher rate mortgage despite being able to get a better deal elsewhere there could be a complaint for miss selling. Find your paperwork from your previous mortgage advisor, have a word and see what they say. If theyre no longer in business speak to the network that they were an appointed reprensentative of, if they were one.

standingonmyown2feet

Thank-you ACG, that is interesting, we were hoping to drop to a mortgage that was only 100K at the end of it, so if we make sure we take sufficient funds out as a wage/dividend for the next year to be able to show this, it may mean that eventually we can move house and onto a standard mortgage then....

Hmm then there is another option for starters... thank-you !

Thank-you also for the other information, that is also very interesting I will look into that too.

Simon_gloster

It seems you qualify for a mortgage based on a minimum of 2 years trading generally, however, it seems the business is at a loss, therefore as you put, if you worked for Game, it would be equivalent of having an gross annual income of £0.

For a joint mortgage with lets say 2 children and no personal debt (I know you have from your post), you'd need a household income in the region of £30,000 net profit between you. If not, UCB is your only option.

As for interest only, as ACG put it, the high street (which is probably where your looking to get to) lenders have made it very very difficult to get them, ie max LTV 50-75% and minimum incomes £50K (Natwest) or £1million pension fund (Lloyds). Therefore if you cannot prove you have the means to repay in x years (sale of your home no acceptable), you'd be forced onto repayment whether you like it or not.

So UCB I/O for monthly payments, MAY actually suit you if thats your choice. Go onto mortgage calculators online and type in your mortgage amount on a repayment basis at an average of 4% and see what the payments are.

chewback

Unfortunately, the bank scum have decided that they do not want to lend to small businesses in any way!! The inequality of the situation is that if I worked for you as an employee for more than 2 months and showed payslips etc I would get a mortgage. Yet you as the employer cannot. Now if you decided to to work for a friend with a company and paid all the relevant tax etc, you could get a mortgage after 2 months. There is nothing to say that you have to keep the job after 2 months is there??

Leeaquila

So can I ask, where does your income come from at present?