Advice please on mortgage for self employed

sc6_2

Hello everyone - would appreciate some advice on our situation.

We currentlly have a flexible tracker mortg with the Abbey at 6%. We owe £130000 with eleven years left to pay and a facility to increase borrowing to £155000.

We want to move house and downsize as the kids are leaving home and off to Uni, and we want to use a proportion of the equity in the house to pay off debt. (Yes we have well and truly had our lightbulb moment and have addressed our spending habits thanks to all we have learned on these boards- debt is firmly under control and is decreasing each month - we just want to get rid of it now we have learned our lesson).

OH is self employed with certified accounts going back 14 years. His certified profit (after expenses) for last three years are £58000 (for 06) £56000 (for 05) and £61000. (for 04). Income for this year will be comparable but wont get his accounts certified til Sept.

Once we move his only debt will be a car loan of £12000 which comes out of his pre tax profit.

I earn £17250 but have debts of £21000. These will be tackled as soon as we move as we will have a lot more disposable income and will be able to pay them off in a relatively short time.

We are trying to work out what sort of mortgage we could get. Ideally we only want to put 5% down but could manage 10%. Our current mortgage blurb says it will loan only up to 90% of the valuation so it wouldnt be any good to stay with the one we have got with the Abbey if we wanted to only put 5% down.

Ideally we would like to go for a fixed rate at a lower rate than 6%.

Hope you are all still with me as I am now getting to the point!! Can you good people tell me if we would have any problems getting a bog standard mortgage at a good rate because of fact OH is self employed plus he currently has debt plus I will still have debt plus we wont be putting a large deposit down? Our credit ratings are fine - we can afford the debt we have and have never been late payers - we just want to get rid of it!!

Also how much we could borrow? We were wondering if it would be as simple as 3 x £58000 which would be £174000 which would be ideal and they could just ignore my salary as my debt cancels it out? Or are things never that simple!!

We have had a look around and can get a suitable house without increasing our mortgage from £130000. We could also get something even better that we probably wouldnt have to move from again if we could go to £170000. We really need some idea before we go any further. I know this means we are basically turning unsecured debt into secured debt but also we would gain a more suitable house - we have never liked the one we are in but have stayed til kids finished their education.

We have worked out that we can afford the increased mortgage repayments if we increase the mortgage - we would probably extend the term to 15 years in that circumstance. By reducing our commitments we can easily afford to increase the mortgage.

(Also we are repaying around £650 off the capital element of our mortgage each month so if it takes us a while to sell it will increase the equity we end up with).

Would really appreciate any help you can give us - it is such a headache when you are a novice in these matters - thanks in advance for your time.

Snow_Dog

Find a good IFA that deals with mortgages, they will get you a good deal.

Make sure they are whole of market, preferably go on recommendation.

herbiesjp

YOu both have good incomes.

YOur OH will only have the the £12k loan, although you will have £21k outstanding in debts.

I think you should still be bale to get the higher mortagge amount you are looking at

As rightly stated above, have a word with a fee free whole of market adviser to run through the affordability with you and to see what mortgage amounts and rates you could be looking at

HTH

hokkers999

sc6 wrote: »

Hello everyone - would appreciate some advice on our situation.

[snip]

Would really appreciate any help you can give us - it is such a headache when you are a novice in these matters - thanks in advance for your time.

With a combined income of £75K (if you pay off the car loan in the move) you could borrow (depending on credit history etc) over £375,000....

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sc6_2

Thanks to all for your very encouraging advice - it is much appreciated. We have found a whole of market advisor and OH is on the phone to him as I type this!!