Lenders who take average of last 4 (not 3 years)?

Redbull_UK

I'll be getting a new mortgage soon, with a LTV of around 36% (I hope I calculated that right - £100K loan to £275K value).

As a self-employed person (well, technically an employed director, but I have a low salary plus dividends) I understand that most lenders take an average of my last 3 years earnings. Unfortunately, 3 years ago we had a very poor year, whereas the year before that was ok.

Are there any lenders who look at the previous 4 years, as this would of course, boost my average earnings?

Thrugelmir

Lenders will look at consistancy and trends not just averages. Given that a lot has changed in the past 4 years economically and financially for the worse. Would a forecast for the coming year show an improving trend? On the basis of confirmed orders or contracts.

The_J

Most lenders will look at the average of the last 2 years (salary + dividends). If the latest year is a drop they will work off that lower figure.

Only a few go back 3 years. None go back 4 years.

Some will look at net profit rather than salary + dividends. Advise speaking to a broker.

holly_hobby

Yes J is right, its always an average over the term.

As a Co D you are classed a self employed for mge purposes.

Your blip 3 yrs ago shouldn't prove too much probs - if you go to a 2 yr lender, and have showed boyant net profits and trading since the poor yr.
Of course throwing in a projection with your application (even if not asked for), and a letter detailing your secured long term contracts etc, would do no harm at all - and may give you leave to approach on an AIP basis, those whom look at 3 yrs (esp if their rates are more attractive).

At a 36% LTV, this will certainly fall into a UWs personal mandate - so even if the ave of the assessed yrs come a little short, a snr UW will be able to use their discrection - which is where your "supporting documentation" will assist (along with a nice clean credit record that is ! )

Fret not, think of submitting your app, as putting together a business plan for the bank i.e you need to show the lender, why they should feel confident in lending to you, not give them reasons not to.

If you have a decent broker he'll know the ropes and should prove invaluable in getting this through for you - but I think if the last 2 yrs demonstrate sufficient income, you should be fine ...

Hope this helps and good luck

Holly

Redbull_UK

Superb information from everyone there. Thanks very much folks