looking at getting a mortgage as self employed what figure do we put down as earnings

Daniyella

My partner is self employed but he works under the construction industry scheme so is taxed at source now we are looking at getting a mortgage this year i have a question...

Say for example his earnings are £43000 before tax this year and £37000 last year will they go off £40k as the average or do they have a special way of working it out how much of a mortgage he can get?

Sorry if i sound a little bit stupid?

chrismac1

it should go on his net profit per the accounts, and normally he'll be asked for 3 years of these.

Daniyella

They only want 2 years audited accounts, will be combined over the 2 years then?

grey_gym_sock

some lenders will average the 2 years, some will take the latest year. either way, they like to see earnings rising.

Conrad

OP - be aware that 'earnings' means different things to different people. To avoid confusion lenders will use his net profit, after all expenses such as tools / clothing / travel / insurance have been deducted.

I say this because many times people think lenders want thier turnover.

Daniyella

So it's his NET PROFIT? A

sandyinvent

They do not always need audited accounts. They might need just the accounts with an accountant's confirmation, a SA302 form from hmrc or even projected figures from a very trusted accountancy.

They can also check these figures with hmrc under the income verification scheme (so whatever you do, make sure you quote exactly what the tax return was).