Joint application - Self employed complications

s_D_john3

• We already own a flat. £94k outstanding, last valued at £126k. This will not sell quickly but apparently would rent next week so we would request consent to let from HSBC as the rental will cover the interest by around 250%. HSBC are apparently always happy to grant one year at no cost.
• We want to purchase a new house for £280k and can scrape together a £28k deposit, £8,400 for SD and c.£1,500 for fees.
• My salary has recently moved up to £42k basic.
• My partner was employed for three years as a dentist, but last August switched to being a self-employed dentist.
• Her first year of accounts have just been finalised by a chartered accountant, but only cover 9 months. The profits are supplemented by salary for the other three months. Net profit = £28k, salaried earnings = £15k. for one year prior to that she was £45k gross salaried, and for the two years before that, £30k gross pa.
• She has a contract with her practice which should be netting her at least £45k p.a. going forward. She will also be employed for one day a week earning around £6000 gross per year.
• Our only other commitments are a £15k car loan, incurring £350 per month in payments.

I'm pretty hopeful that if the banks take account of a fair earnings number, most income multipliers will show that we can borrow the £252k required. My questions are:

1) How feasible will getting approved be considering the 90% LTV and my partner's recent switch into self-employment (will the banks take a sensible view that dentistry is less risky than a start-up new venture?). Are there any lenders taking a more tailored approach these days?

2) Will the existing property be a big detractor to the application? Our old mortgage rate is only BoE + 0.79% so with the rental valuation we've been given it is very easily covered. We'd look to wait six months and BTL if affordable or sell it in the reamining six months.

Sorry for the length of post. All comments appreciated!

Dave_Ham

Tight, but achievable.

You will need a lender that will accept 1 years accounts (albeit at less than 1 year)

Locate a decent broker and let them do the leg work.

Good luck

nufc_fan

We are in a similar situation to yourselves although currently renting a property, one half an employee the other a self employed dentist with one years accounts. we have a similar deposit and looking at similar priced houses.

Initial "highstreet" search has only really found Scottish widows who specialise in professional mortgages but interest rates are not great. We will be looking for a broker to see what else is available.

Keep this thread updated with your search as I will be interested to see what you manage to find.

s_D_john3

And judging by your name also looking in Newcastle? We're probably looking at the same houses!

I saw the Scottish Widdows one which looks quite promising, but agree the c.6% is a put off. May just have to stomach it for a few years though. I've fired the same details to an IFA some other friends have used in the same situation so will let you know what he says or can personal message you his details if you like.

Dave_Ham

If 6% on a 90% deal with fairly specific issues is a put off, you may need to reset your expectations.

I would budget about 6% for this sort of deal, knowing the lenders you are likely to end up with. You will certainly get no lower than 5.25%

Good luck - love the fact that you assumed the other poster must be in Newcastle area too being a Newcastle United Fan - what would we have assumed if the user name was MUFC_Fan????

s_D_john3

I concede you make a good point re. NUFC Dave.

If 6% is where the market is for a deal like this then fiar enough, we'll have to take it on the chin and try to remortgage at 85% in two years time. I was just comparing it to a 90 LTV 4.99% rate with HSBC (although I have heard they are extremely picky at 90% LTV).

At this end of the market, if you were arranging for me, would you be pointing me to literally one or max two lenders or are there a handful who could get there?

Dave_Ham

Take your point re HSBC, but only a great rate if you can get it otherwise it is just an advert..

As I said would set expectations at 6% and then there are a few lenders in and around 5.5% that would probably take this on, subject to other information being ok.

Likely will end up at a Building Society or type...

nufc_fan

Yes, Newcastle fan not in the city but looking at properties in the surrounding area.

I think that the 6% for 2 years does seem the most likely option, then remortgage at a lower rate asap once fixed period is up.

By all means keep us updated on the thread, I am sure many other self-employed/professionals are in the same boat.