Self Employed Mortgage

aaron69

Hey everyone, need a bit of advice regarding a mortgage. All i am trying to borrow is around 65k, i am self employed and have 3 years accounts which are as follows, year 1 - £1000 Loss, year 2 - £8500 Profit, year 3 - £22000 (year 3 has not been submitted yet but if i must i will submit a larger figure and pay a bit more tax if it means i will get on the property ladder), i was told they take an average of the 3 year accounts then multiply that by 3 or 4? Can anybody confirm this?
Also regarding a deposit is it possible to just put down %10 on a self employed mortgage? Or would this mean i would get a high interest rate? I could manage %15 or %20 at a big push but it would leave me in a really bad position with regard to my business.New to this so if anyone can shed any light on this it will be much appreciated, thanks!!!

Simon_gloster

Bigger deposit, lower rate. That standard across all lenders. Generally a big difference between 10 to 15%.

Those figures aren't actually thay bad, they show growth so thats encouraging.

Most will want 3 years, so as you say get this years done. Those that accept to will use the two most recent audited figures.

Its a myth on what multipes are used, you'll never know until you try.

Halifax for eg if you get 3 yrs SA302's will take an average of the last 2 years should it show an increase year on year. Therefore about £15k income to be used in your case.

ACG

With a 10% deposit, im not sure this is possible. The amount your looking to borrow is really pushing it. If you went with a lender that looks at the last 2 years, your still averaging below £15k x 4 = £60k. Im not sure many lenders would effectively do an income stretch at 90%.

One of the more experienced advisors will confirm whether this is correct or not but i think you will struggle.

Is it workth getting a property and your business suffering? If it suffers how do you intend to pay for your mortgage? Is it not possible to hang on for a year when you will have 2 lots of better accounts and potentially a bigger deposit?

Wh05apk

As ACG says, this will be difficult, it is not so much about the income multiples, but lenders now use affordability, in simple terms, if your last 2 years average £15k (gross), assuming you are single, the lender will assume you need say £7k to live on leaving about £5k from your net pay to cover the mortgage, which might just get you to about £60k.

Dave_Ham

As said, incredibly tight but possible with appropriate lender selection.

You could easily move out of this though if you have a loan or credit card (with balance) not mentioned as this will affect your "affordability"

Conrad

There is one small regional lender that will take your last years profit and a projection for the next set of accounts, this often prooves usefull for such situations. They lend 90%, but 85% will give you a MUCH better chance of being accepted.

An experienced broker with knowledge of Southern lenders (that will none the less lend elsewhere in the UK), will be able to point you in the right direction.

aaron69

Thanks for the replys, like i said i have not put my 3rd year accounts in yet so to increase my chances i might file 30k for my third year which would give me an average of 19000. I may not need 60k as i have seen a few places in need of a bit of work for around 45 - 50k (in the north-east property is pretty cheap). Do you think i should approach a broker or maybe a bank? Also what type of rate should i be looking for variable or fixed? i dont want repayment just interest only as i dont plan to be in the property long term its just to get a foot on the property ladder and get out of the renting game, many thanks!
I do have a loan and credit card which totals around £3000, but realistically i could contribute around £8000 towards a property, i am paying £450pcm in rent and if i bought a place that figure would be halfed so it makes sense to buy somewhere.

Dave_Ham

You may not be able to choose, interest only is very tough to achieve in the current climate and certainly you may have to sacrifice rate in order to facilitate this.

I would suggest given your circumstances you see a broker.

Good luck

Conrad

I agree, interest only is most unlikely to be accepted given the current regulatory landscape.

uksavergirl

We are employed by our own limited company, but only have one year's accounts. Does anyone know how much of a deposit would we need to secure a mortgage?