profits

thorax1

Hi there
Does anyone know how they view your net profits if you are self employed? I have 3 years worth at an average of £30K yr from a chartered accountant and a deposit of 20%. I'm concerned about the affordability. Some say they just ask your accountant. I could go to 25% deposit if I really have to. need 181K loan.

Thrugelmir

By net profits. Do you mean pre or after tax?

dunstonh

The key figure is what you tell HMRC is your income.

thorax1

Thrugelmir wrote: »

By net profits. Do you mean pre or after tax?

Pre tax profits

31K
11K
47K

thanks

Thrugelmir

thorax1 wrote: »

Pre tax profits

31K
11K
47K

thanks

Average of 30k is misleading. What lenders will be looking for is a consistancy in the level of income year in year out.

£11k doesn't look good, irrespective of the reason.

thorax1

Thrugelmir wrote: »

Average of 30k is misleading. What lenders will be looking for is a consistancy in the level of income year in year out.

£11k doesn't look good, irrespective of the reason.

So a bigger deposit should help i guess?

Thrugelmir

thorax1 wrote: »

So a bigger deposit should help i guess?

In essence yes. As in 2 of the last 3 years your accounts do not support a borrowing level that you aspire to achieve.

thorax1

Thrugelmir wrote: »

In essence yes. As in 2 of the last 3 years your accounts do not support a borrowing level that you aspire to achieve.

Thanks. I could probably pay a higher fee and rate? I hear there are some who would take me on sitting about with my £50K deposit for a £227K house. I have no dependants and have been in business for 7 yrs. had a mortgage before and sold my old place.

There seem to be some lenders out there who are willing to risk a bit to fill this gap left by the "computer says no" high street.

Have you heard of Aldemore? backed by Morgan stanley.

thorax1

A great help Thrugelmir! thanks

opinions4u

Why was the second year of the three so poor?

A good underwriter will ask this. If accounts / balance sheet support a story of strong investment or one off costs specific to that year it might be possible to justify using a higher income figure.

ACG

Lenders will want to know the reason for the drop - most wont accept it if there is a decrease in profits at any point.
Unless there is a good reason - ie you bought a new vehicle for cash or something then you may struggle.

Im not convinced this will get you the loan your looking for. There is one lender i know of that with a 25% deposit would only require 1 years accounts - but im not sure they would lend you 4.5x your income.