Mortgages for the self employed

BoBoDobie

I've been self employed for the last 6 years. I initially started running a service business and after about 18 months also set up a internet shop that kind of went hand in hand with the service business. 18 months on I sold the service business and ran the online shop on it's own for a a couple of years. Then I started another online shop (unrelated) and that did well so that I sold the original shop. So now I have just one online shop (congrats if you're still with me!).

Throughout all that I've only ever had the one business account, and my account only submits the one set of accounts for me (Joe Bloggs T/A Business One, then it was Joe Bloggs T/A Business Two and finally Joe Bloggs T/A Business Three).

I've now been employed for 6 months and I'm wanting to apply for a mortgage. I want them to take into account my s/e income as that almost doubles my borrowing potential (and without it the mortgage they've offered is too small for me to buy a property). My question is will the bank care that the 6 years of s/e have gone in different directions and certainly the last 3 years of accounts will be actually based on business 2 and 3. I guess what I'm saying is I used to sell apples and now I sell oranges - do I have to declare that or anything to the bank? Presumably they only want the tax return as proof of income so won't know about the change of direction unless I tell them? I don't want to fall foul of any non-disclosure charge or anything but I'm really depending on them taking this s/e proof of income to buy a house.

Thanks for any advice.

bargainhunt2012

I am not a mortgage advisor but I suppose the whole purpose of being self employed is that you are free to take on various different economic activities!

GMS

Are you still tradign in addition to being in employment? If so you should be able to find a lender who will take the additional income from self employment.

Alternatively get a broker on board who can ring around lenders and get your application pre agreed

The_J

As GMS says it will be based on whether you are still trading with the self employed income and how likely the lender foresees this arrangement continuing at the same level in the future. I doubt many will do their full borrowing potential using 100% of both incomes so I wouldn't get your heart set on that.

Conrad

Perhaps one for a specialist lender this, but if your'e deposit is sufficiently large, the good news is the rates are competetive.

Be aware some lenders ask for personal Bank statements, in particular the Banks such as Nat West, so they would be looking to see all income running through the Bank.

Get a decent broker as this needs to be done right first time.

All the best

BoBoDobie

Sorry yes I'm still trading with the s/e online shop as well as being employed. I've had quotes from my broker based on the employment and s/e, I'm not sure as you say how much of the s/e they are taking into account but the quotes they've come back with are fine for what I'm looking at buying.

It's just that a friend put the wind up me last night by saying they may not include the s/e as this online business has only been going for year (although its overlapped with the other business's that have been going 6 years). I don't want to base my calculations on borrowing X amount if they suddenly won't include my s/e figures if you see what I mean.

Conrad

An experienced broker knows what to do here.

For example putting down a Ltd co would be a deal killer where the lender checks companies house to see how long THAT entity had been established. Remember they will examine things like your business email address and domain name also.

Tell us which lender your broker is recommending and we might be able to tell you what your'e chances are.

BoBoDobie

Halifax and Natwest were both mentioned as possibilities. Will they go into all that detail checking domains and email adressess? I've never had to use my self employment before so I've no idea if they just look at your yearly tax return or what.

Simon_gloster

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BoBoDobie wrote: »

Sorry yes I'm still trading with the s/e online shop as well as being employed. I've had quotes from my broker based on the employment and s/e, I'm not sure as you say how much of the s/e they are taking into account but the quotes they've come back with are fine for what I'm looking at buying.

It's just that a friend put the wind up me last night by saying they may not include the s/e as this online business has only been going for year (although its overlapped with the other business's that have been going 6 years). I don't want to base my calculations on borrowing X amount if they suddenly won't include my s/e figures if you see what I mean.

I'm reading from......a new business enterprise eatablished for one year....but trading ad someone self employed for 6.

You will be asked generally the length of time you have been s/e and asked the year you currenr s/e business started trading.

You should use employment income mainly although if you are close to what you need, common sense from an underwriter should agree this.

Whatever you do, don't lie about you employment history as lenders will check you out.

Conrad

Lenders have to prove each case is able to pass a sustainability test, and having 2 earned income sources is deemed high risk.

I think your'e over complicating things to be frank.

NATWEST - Noooooooo, they are part of RBS that was miuntes from going bust until the Government stepped in. They also have massive exposure to foreign debt. That would be the last lender to try. Any THINKING broker would know this, but alas some are more interested in the footie news than matters economic.

Even Halifax are very weak afterall the Gov't strong armed Lloyds into buying them after the extent of Halifax bad loan book was uncovered.

The_J

How exposed Natwest are to foreign markets or what their share price has done in the last few years is pretty irrelevant Conrad. What effect will that have on the client? They have decent rates and pretty flexible criteria. Same for Halifax.

It's pretty uncertain ground to not recommend a lender based on its wider business if the product is a debt. For savings it's completely different of course.