newly self employed -any chance of getting a mortgage??!!

lollypink

hi all, looking for some advice regards to buying saving for a mortgage which I am starting to be seriously worried I will never get one!! I am 32 I have worked full time as teacher for the last six years. I now earn around 30K per annum. However whilst teaching I set up a part time business setting up my own dance school , as the school has grown alongside teaching I have made the decision to go part time (2 days per week) teaching to concentrate on running the dance school which is doing well, at leats enough to make up the other half of my income. I am registered as a sole trader but thinking of becoming LTD according to my accountant. Anyway of course still renting of course I would love to buy a house in the not too distant future...but I read you need three years accounts etc etc. So have I got no chance of getting a mortgage before that?? And if so what is the best way to go now with regard to managing the accounts etc etc? My friend who is self employed managed to get a mortgage by just showing her bank statements whereby she showed she had three year steady income despite the fact her business is no longer running she had been paying herself the same wage...???? Will lenders find three years steady income on my bank statements enough or will they look deeper into my employment status etc etc..

Forgive me for being niave, being self employed is completely new to me as are mortgage applications!!! Any advice welcomed!!!

opinions4u

Decent deposit size and a couple of years' audited accounts would help.

A guarantor might help things to happen sooner, but I'd be surprised if it did.

ACG

If you have a 25% deposit you may only need 1 years accounts.
Put that along the part time income and you might be ok to get a fairly decent mortgage.

Simon_gloster

Personally I think youd struggle.

You would need to declare you have 2 jobs, fine. The problem then arises. Self employed income now has to be verified via the inland revenue (SA302) and min 2 complete years with accounts. How your mate did 3 months bank stats must have been a few years ago and doesnt apply now.

Principality will do one year accounts, good deposit needed.

If you have under 1 year then its a no.

lollypink

thanks all, I have two years accounts but in my first year broke even and this year I made a small profit I have put everything back into the business and as I was working full time I didnt need to draw a wage but obviously I will from September this year when I go part time at work.

My dad would be a guarentor if needed but then hes 65 so dont know if it would count.

So reccomendations would be solid year of accounts on top of the past two and 25% deposit before applying?

Thanks for all your help. x

HappyMJ

You don't always need accounts if you can show fixed term contracts with clients then that would help. If the forecast cash flow looks to be improving from the first two years then show that as well......but a deposit is essential. The more deposit you have the less they scrutinize your accounts.

If your dad is willing to be guarantor then why doesn't he buy the house in his name and you rent it from him.

lollypink

thanks thats helpful although can my dad get a mortgage at his age? would it be better if we applied for a joint one perhaps??

davegym

lollypink wrote: »

thanks thats helpful although can my dad get a mortgage at his age? would it be better if we applied for a joint one perhaps??

Dont quote me on this but i have heard that you're not legally allowed to rent a property to a relative it would be wise to check the legalities of that option

maninthestreet

davegym wrote: »

Dont quote me on this but i have heard that you're not legally allowed to rent a property to a relative it would be wise to check the legalities of that option

Really, what section of what act of parliament states that?

inmypocketnottheirs

maninthestreet wrote: »

Really, what section of what act of parliament states that?

A bloke at the gym said so!