Advice about getting a mortgage - broker?

mossy

Hi

I have just been reading through Martin's views on mortgage brokers thread and so based on what people have said, I'm posting my query on here.

We are planning on buying a house this year (sold ours a few years ago when we moved area and are currently renting). We are waiting until we have done DH's tax return on the 6th April so that we can include this years figures.

DH is self employed. This years figures (2012-13) will be really good, last years (2011-12) were good, the year before (2010-11) they weren't very high. This is why we are waiting until April as when we saw our bank they said they only look at the last two years to work out a figure they'd lend us. So it means that 2010-11 figures won't bring down our average. As a side note they said they only need the tax return sheet that shows the confirmed figures rather than seeing 'the' accounts. I do the accounts for DH (he's a sole trader) so they aren't audited by an accountant, thought I'd mention that just in case it might make a difference.

I work full time ish (term time - TA in a school) and have the relevant pay slips etc.

Our deposit will be around 11.5% (based on around a £170k purchase price).

We don't have any current debts, and have a good credit rating. Borrowed money in the past but paid everything back at the proper time etc. We use a credit card for business stuff but clear it each month etc.

We saw our bank (Barclays) last year to get an idea if they would lend us anything or just laugh at us!! Surprisingly they could offer us a half decent amount although not enough to buy anything down here, however it gave us some hope.

Of course with a deposit just over 10% we are only eligible for their fixed rate deals which means that we probably wouldn't be able to 'afford' to pay for the amount we could borrow/would need to borrow to buy a house. If however we had a deal on a lower rate it would be more affordable on a monthly basis.

Anyway, I'm beginning to ramble. Normally I'm a sensible savvy person but with this mortgage I'm a little scared and know I'd take any offer thrown at me so that we could get a house again. However, just going with Barclays because it's relatively safe that they will lend to us is daft if we could get a better mortgage deal somewhere else.

So given the above information.

1. Assuming that it's worth seeing a mortgage broker, would either a whole market/independent brokers be able to help us as our main income is from Self employed work? Would one be more suitable than the other, or would it make no difference?

2. What type of self employed income evidence will a broker most likely want to see?

3. Are we likely to pay more/higher fees because of the s/e element?

4. Our bank statements are online but I figure they will be okay with printed copies? We have lots of 'pots' that are linked to our current account as I like to move money around and split it in to the pots (petrol, shopping etc). However, I have recently been leaving everything in the main current account as I thought that would probably look better to anyone looking at our bank statements. Barclays of course would be able to see the full picture but I realise no one else would be!

I hope that makes sense and that there's enough information for someone to give us some advice. I'm still not feeling that well so apologies in advance if it's utter gibberish!!

Thanks in advance your help. :lovethoug

amcg100

Maybe you should trust the banks to ensure that you don't borrow outwith the range that you can definitely expect to repay. Most people come to this website because they have got into financial difficulty, and usually it is too late. From the sound of things you are currently solvent and my advice would be for you to stay that way by borrowing only on the strength of your guaranteed income, and not on the strength of anything speculative.
good luck

ACG

Im just going to answer your questions and then add a bit...

1) Yes, either will be fine.
2)SA302s (Self assessment returns) or accounts - or both if available.
3)No, you have 3 years accounts so should be ok.
4)Your normal account should be enough, they may ask to see more but if you have then it shouldnt be an issue. As for them being online thats fine.

All of the above is subject to your income being enough. You may for example only want/have to use your last 2 years accounts in which case it may limit whats available.

Woolwich 90% mortgage isnt particularly great although their others arnt too bad.

mossy

Hi there amcg100, I totally agree with what you're saying. We have in the past borrowed too much money (credit cards etc) although all paid for without problems, just a waste of money, so we have that tshirt and have no intention of wearing it again.

I've actually altered what I said slightly because I was rambling a bit when I was talking about affording it etc.

What I mean is for example based on our income the bank says we can borrow up to a certain amount of money and the monthly repayments would be £1100 but we know that the guaranteed s/e income that comes in each month means we could afford £900 mortgage repayments.

That's what I mean by making sure we could afford it.

However, we might be able to borrow more money from another provider with a better rate that would result in £900 repayments compared to borrowing less (and so not being able to get a slightly nicer home) from Barclays on a higher rate that would result in £900 repayments.

Clear as mud....right!?!

mossy

ACG wrote: »

3)No, you have 3 years accounts so should be ok.

All of the above is subject to your income being enough. You may for example only want/have to use your last 2 years accounts in which case it may limit whats available.

Hi there ACG, firstly thanks for taking the time to post.

The 3rd year is a third of what this year's figures are likely to be so I would prefer if it 'evaporated' into thin air as such. It was when we had first moved and DH was setting himself up which is why it was so low. It's not likely to help us and more likely to hinder.

From what you've said am I right to assume that some lenders will only/prefer to lend on 3 years accounts rather than 2, so their rates wouldn't be as good for 2 years worth of history?

Sorry to be a pain, it's been a long time 'out of the game' and so I want to be as clued up as possible when we go for a mortgage in April.

amcg100

yes - mud is never clear
Clearly you know what you are doing, but maybe you lack confidence a little in that you will not apply for a mortgage in case you get knocked back ( and as we know this affects credit ratings ) I suffer from this syndrome myself from time to time. Just go for it -
Apply for every product you feel is appropriate to your needs, do your arithmetic and work out which one is best for you. The main thing is not to be intimidated by junior bank clerks - always remember that you are the customer and that you are in a buyers market. Banks often market their products in a way that make people feel inferior, and the less you pander to this strategy the better your mortgage will be. Take your time and do not be bullied - good luck

ACG

A lot of lenders request 3 years accounts, so if your only using 2 years then it reduces the number of lenders available - in which case it MAY reduce the deals available.

It doesnt mean you will get a bad deal, it might not even have an effect. Obviously if your trying to get as much as possible then you cant have your cake an eat it so it might be a case of giving up the better rates in order to get the amount your after.

There isnt enough info on here for me to give you a definitive answer, but once you have your accounts and you speak to a broker they will be able to give a more authoritative answer as they will have all the information available to them.