3 years books self employed/ dip in the middle??

Hopeful37

Good Morning,

This is my first post-so I hope ive put it in the right place.:)

We have a ltd company and wish to move house.

We would have approx 110 equity from this house.
great credit history.
Books have been 48,000.00 (wages and dividends)
then this years were unfortunately 26,000.00 (" ")
But the next years should be approx 55,000.00 (" ") (taking into account all the contracts booked in already-that we have been making good headway into.)

I hate living where we are and, thought we could just sell and rent until next years books are in (i figured by the time the house sold- we wouldnt have to rent for long-it would also put us in a better position for the kind of house we want- real wreck that needs lots of work-but they dont seem to hang about on the market for long those)

My question is, how is the dip in the middle of our books going to affect us-what kind of mortagage amount would we be likely to get? Would we get a mortgage offer at all?

I know no one could give concrete answers-but im worried about selling and then not being able to get back on the housing ladder.

Any advice greatfully received x

Dave_Ham

Lenders do not like a dip in the most recent years figures. That said a decent broker should know which lenders to approach.

I would suggest sitting down with an experienced broker for an hour and obtain a decision in principle. This will allow you to market your home knowing that you have been provisionally accepted.

Your credit score and deposit support your application.

Your Accountant may well have a mortgage broker that they work with and have a decent relationship already.

Good luck

Wh05apk

At the moment you do not have a "dip in the middle" you currently have "declining" profits, so most lenders (some will not lend on declining profits) will take your current year of £26,000 as income, so currently you "may" get upto about £130k mortgage based on that figure.

Next year, or when ever the projected figure of £55,000 is reflected in your accounts, most lenders would then average taking the 2 years to give £40,500, potentially then giving you up to £200k.

murphydog999

We've just had the same problem, caused by a 10 month employed period that of course makes the accounts look bad. There were valid reasons why the employment was taken (not due to lack of work but development opportunity) and all wage slips were produced.

However in the world of black is black and white is white, because it wasn't on the P & L, our m.i.p. of £215K with a LTV of less than 50% was refused. They wouldn't even honour our current mortgage!!

All the figures were stated at the outset, nothing was hidden, 'the system' actually gave us more than the advisor calculated! An M.I.P. means absolutely nothing in this instance. It allows you to find your ideal property, set wheels in motion, and then have the rug pulled from under you.

(We are a tad bitter about this, as you can tell!!)

However, we have found that our own bank actually has a 'forecast' column in their mortgage calculations - which is surely a more sensible option - and we now have secured lending with no problems at all.

Hopeful37

Thank you all so very much for your posts.
I dont blame you being bitter about that Murphy dog, that would have frightened the life out of me. I know what you mean about the bank not wanting to honour your current mortgage-We approached our current mortgage lender to explain that we wanted to move-could they help-bearing in mind we pay double our monthly mortgage payments to try and pay as much off as possible(our monthly mortgage is not huge)-no arrears-no missed payments-been with them 4 years-because our income dropped they are not interested in offering what we currently have. I thought our track record would have stood us in good stead-nope!
I'd never heard of a 'forcast column'(had to google it:o) so that is interesting to know to thank you.

I do undestand that lenders dont like a dip in figures-but I am quite happy to wait until the next set of figures are in-and for them to take the average (infact I'm really quite relieved-that sounds much better than a flat 'no get your coat'. you've made my day)

We dont want a massive mortgage because you've still got to pay it back. We would only be looking to spend 250k to 300k on a house,so that all sounds good.

Thank you all so much for taking the time to reply to me i really do appreciate it.:j x

ACG

To some extent it will depend on the reason for the dip.

For example if you went and bought a £20-30k vehicle in cash then that would account for the dip. If business just fell off the cliff then that could be a different response.

I agree with the others, speak to a broker they might be able to find you something.