Advice Needed: New Mortgage Partner Self Employed

ScottAnne

Can anyone shead any light on this for me.

Myself and OH took out a mortgage 3 years ago, which is due to end in Nov. At the time of application, OH was a sub contractor and could provide proof of income. He completed self assessment tax returns each year. He got an accountant to complete 03-04 & 04-05. Last year 05-06 he did himself.

In july 06, OH decided to go self employed and began trading himself (sole Trader). We now wish to move house & have reserved a plot on a new development. this house is due to complete in Oct so existing lender has advised no redemption fees on existing mortgage if we do not stay with them. We have been dealing with a mortgage broker for 2 weeks who has not yet secured a mortgage promise for the actual amount we feel we need to borrow to secure the property. Other issue is missives on the new property needs to be signed this week to legally tie us into buying the new property.

I never imagined getting a mortgage would be so difficult. Our circumstances are: my income is £13,464.00, To date turnover in OH's business account is £20000, and we have a personal loan of 11K which we repay £252 each month. OH has secured a contract for the next 12 weeks which will bring in a further £8000, he also has other jobs after that.

I spoke to the broker initally and said we require £170K mortgage, purchase price is £199500. The 30K deposit will be from the sale of our existing property. The broker is making enquiries to lenders advising that OH's income is 28K (which is made up of 20K turnover so far plus the expected 8K in the next 12 weeks)???? this I dont understand because obviously by the time we do applications OH's income would be higher and we will have 1 years accounts for OH trading as a sole trader. Broker is implying that it is quite safe to sign the missives for the new property & we will be in a better position nearer the time of completion and can re jig the figures then. Currently the highest mortgage promise we have been offered is £160K.

My question is: Do we sign and live in hope that the years accounts will show adequate earnings for us to stay with existing lender?. Or do we go self cert? an area I dont really understand..

Any advice appreciated....

MortgageMamma

DO NOT and I mean DO NOT sign those missives until you have an agreement in principle, it would actually be better to have an offer

Ask if the builders could give you a weeks grace on those missives because your mortgage broker has not come up with the goods - I actually managed to negotiate this with a firm of builders in westcraigs in December for a client who came to me in the same situation as you in a complete blind panic

is the broker you are dealing with scottish or english? Where is he based? Estate agency, through the builders?

Whoever he is he has a lot to answer for, this should be done by now - perhaps he just doesnt know?

Mr_helpful

The tax year used for hubby will be 05 / 06 as 06 /07 will not be with the IR yet assuming his year runs april to april so possibly no need for self cert as although he did accounts himself he can get SA302 form off the IR takes about 2 days.

ScottAnne

Hi MortgagaeMamma

Thanks for getting back to me.

I spoke to the building company yesterday, explained the situation and asked for a few days grace. So at least I have more time to get something concrete.

The broker is Scottish and he was recommended to me by the sales woman in the site office at the development.. I cannot understand why it has taken so long and why they are insistent on getting a mortgage promise from lenders implying that we are ordinary borrowers.... I have from the very outset said that it will be difficult to prove OH's income at this stage. I am presuming when we have a years accounts (July) we would be considered by the lenders as ordinary customers but for the purposes of signing this paperwork we have nothing to go on really.

MortgageMamma

Hi Anne

Have you thought of instructing another broker who can commit to you and work quickly

Perhaps the mortgage broker your builders have recommended is tied to a panel of lenders who do not have anything that is suitable or he could be experienced or just plain lazy or negligent who knows? The most important thing is that you work with someone who respects to urgency of the situation and can act accordingly

If you have paid your broker a fee I would seriously consider asking for a refund

MM

ScottAnne

Thanks MM

I actually think the broker has been lazy and cannt see the urgency of the situation. I have said during several of our conversations that the paperwork needed to be signed.

I am going to contact him tomoroow morning first thing to lay bare my concerns and if he cannot help me, I will contact another.

MortgageMamma

Good luck, but remember, if this is how lazy he is about getting the application in, (this is the thing us brokers work most quickly for) then how lazy is he going to be with the onward administration of the application.

Don't let him brush off your concerns as nothing - he has put you in a potentially dangerous situation where you are required to sign missives without a mortgage offer - not good

Best of luck

MM