Self-employed mortgage: what can I do to improve chances?

Moonraker71

Hello, brand new on here and hoping to get some advice. Apologies in advance for the length of this post!

My situation: I've been self-employed since Aug 2011; total of 1 yr 7 mths. I have one set of accounts for 11/12 and am going to file my 12/13 return as soon as poss after April 5th rather than wait till next Jan. So by mid-April I should have two sets of accounts and SA302s.

I live in one of the most expensive cities in the UK outside London, and looking to move 20 miles away where property is loads cheaper. I'd market my one-bed flat for £215k which is mid-way between two valuations, and want to buy a small terraced house for around £240k in the new town.

My outstanding mortgage is 80k. If I sell my flat for say £205k (similar one next door recently went for £210k but just being cautious) that would leave me with £125k 'profit', but I've also used £6k of mortgage reserve fund for a lease extension, plus would need about £5k for stamp duty, fees, conveyancing etc. Don't have hardly any savings, working to pay off debts first (£5k outstanding)

But hopefully I'd have about £115k left to put down on new property of £240k. Meaning I'm looking to raise a total of £125k (£45k on top of my current £80k mortgage).

I have a so-called portable mortgage with the Woolwich and am on a lifetime tracker of 1.99% above base rate. I really don't want to lose this deal. They ordinarily require 3 years self-employment and two years of accounts, but said when I've filed my 12/13 accounts they will put a case together for a panel of underwriters to make a decision on, based on my large deposit, excellent credit rating, and the fact I am still working (on a freelance basis) for the same co. I used to be employed by. This might sway them over not being self-employed for long enough apparently.

My turnover this year will be approx £40k. Around £32,500 after tax I think.

My questions are:

a) Am I right in thinking that even though my mortgage is 'portable' only the existing amount would be ported on the current rate (if they even agree to that) and the new 45k would be on a different deal?

b) the mortgage guy at the bank said my chances are about 50/50 - can I do anything in the next few weeks to improve this?

c) am I right in thinking I haven't got a hope in hell of beating the rate I'm on by going elsewhere?

If anyone has any pearls of wisdom or been in a similar position would love to hear. Many thanks in advance.

kingstreet

The income used for the self-employed is "net profit." This is turnover, less expenses and capital allowances, but before tax and national insurance.

You are unlikely to be able to borrow extra on the current rate. You normally get the "port" based in the amount of your current mortgage, plus a new product from the lender's current range for the increased borrowing.

Not much you can do now.

There are rates broadly similar to what you have now, but nothing perhaps quite as good. However, the product you get for the increased borrowing may mean you'd be better off with the whole mortgage on a new rate with a different lender.

pleasedelete

Self employed or limited company?

Moonraker71

Thanks Kingstreet, that's been confusing me for weeks. Now wondering whether I should claim all my expenses or not as this would mean net profit would be higher... but then so would tax. Hmmm.

Anyway, will probably all be in vain. So much for me proclaiming my "excellent credit rating" (which is what I was told when I opened a 0% credit card a month ago). Just got my Experian and Equifax reports and I have 4 - yes FOUR late payments showing on Equifax from a sodding mail order co. I forgot all about. Three from 2009 and one from May 2012 so I suppose I am well and truly !!!!!!ed now. Can't believe it. Could weep. Experian on the other hand shows an 'excellent' score of 978 with no negatives. But am assuming that one is worthless.

Guess I will be stuck in this tiny flat for a few more years then, if this is going to throw a spanner into the works

pleasedelete: am a sole trader.

kingstreet

A few mail order late payments may not be a deal-breaker on a 52% advance.

See how you get on with your current lender, then talk to an independent or whole market broker if they say no.

Moonraker71

Really? That's reassuring. I thought if I had one as recently as last May I'd be scuppered. Guess I'll just have to wait and see then - thanks.

kingstreet

There are one or two lenders who don't take mobile phone and mail order late payments as seriously as others. They can be a back-up if you have problems with Barclays.