Self Employed remortgaging - business had bad year

crazycatlady1984

Hiya,

Just wondering if anybody knows of any good mortgage lenders for the self employed?

Situation is this - Got a mortgage and bought a house in 2011. I was employed on approx 24K p/a, at this point OH had been self empoyed with one years accounts at 18K. Halifax one of only lenders who would consider only one years accounts, and we got mortgage of £154K to buy proprery at £184K (30K deposit).

Our mortgage term is almost up and need to re-mortgage. Property valued at £200k, and mortgage is £148k. I have paid some overpayments since taking out the mortgage, my salary is now at £25.5K, but the issue is that OH's business has not had a great year (2011); books just back from the accountant and net profit was just £5K.

I'm now concerned that this is going to make it difficult for us to remortgage. I had worked hard to get our credit ratings up before we bought the house and they are both still very high, no missed payments etc on anything. We are also just about to get 2012 business accounts done. We are hoping they are going to be much better than the £5k for the previous year, but obv, our accountant works to keep our tax bill down; dont want to be in the position of having to increase profit and tax liability to get mortgage.

We made a lot of sacrafices to buy our house and dont have a lot of outgoings, so the thing is that during the year of only £5K being earned by other half, we still got by, we were never in any danger of defaulting on mortgage, but I dont know if lenders will take that into account or if they will jut do a simple calculation based on combined earnings.

Any advise would be appreciated!:)

Let_Us_See

Probably best to stay with Halifax and you can either revert to their SVR (currently 3.99% I believe) or switch to a Product Transfer rate. Both of these options should not include any form of underwriting.

crazycatlady1984

Let_Us_See wrote: »

Probably best to stay with Halifax and you can either revert to their SVR (currently 3.99% I believe) or switch to a Product Transfer rate. Both of these options should not include any form of underwriting.

Thanks!

What is a Product Transfer rate? Is this just moving onto another deal with the Halifax?

I dont want to be on a variable rate as, despite us not being totally skint, I do have to keep to as strict a budget as I can, so I would be v nervous about not having a fixed rate. :eek:

Would be happy to stay with the Halifax on another fixed rate though. Having done a few of their online calculators, our monthly payment could end up going down from £794 to apprx £650, which would make a big difference each month (alternatively, could use the diff between £794 and the new rate to make overpayments each month).

Let_Us_See

Yes. A Product Transfer is just simply Halifax's term for an existing lender switching to another scheme. Whilst there are fixed rate PTs available, they may not be as competitive as the SVR., but will protect you from interest rate rises. If you went direct to Halifax then I am surprised they have not contacted you. If you have a broker, phone him now and discuss your Halifax options.


"Our mortgage term is almost up and need to re-mortgage."
PS. I assume it is your existing scheme ending and not your mortgage term?

crazycatlady1984

Sorry, yes, it was a 2 year fixed rate which is coming to an end. Mortgage term was 30years, so 28 years now.

We didn't go direct through Halifax. We went through an estate agent mortgage adviser as I had received some advice from him before. Felt we needed a bit of help and I trusted him so went with him. As he ultimately works for estate agent though I dont know if he'd be interested in arranging for us again, or even if it would be worth the fees when I could just go direct to Halifax.

So I guess my options would be apply for DiP online, or ask for an appointment in branch? Or phone them?

Thx for your help

nrsql

You might want to calculate how much a fixed rate would actually cost. Take the fees as a percentage of the mortgage amount and divide by the numebr of years of the fixed rate, add that to the mortgage rate and it will give an approximate rate that you will be paying. Compare that to the SVR that you could default onto and decide whether you think it's possible that the rate could increase by that amount (actually averaged over the fixed rate so think increase by double the difference).

That will give you an idea of the camparison between the two and you can decide on your attitude to risk based on that. Remember also on a lower rate you can overpay more so the risk of an increase is reduced. I have been working on the assumption that any rate increase in the near future will cause too many defaults - but could be that individuals that can afford it will be targetted or companies will decide to reduce their book. BoI and Cyprus seem to me like test cases before others jump on.

I think the fees being charged now make a big difference unless you are fixing for a long term. E.g. 2000 fees on a 100k mortgage fixed 4% for 2 years pushes the rate up by 1%. That will also give people a chance to check whether whatI am suggesting sounds correct.

Let_Us_See

[QUOTE=crazycatlady1984;60293783

So I guess my options would be apply for DiP online, or ask for an appointment in branch? Or phone them?
[/QUOTE]

No need - the process is much simpler. Simply phone Halifax (you will need your mortgage account number, usually A/xxxxxxxxxx) and and ask for the available PT rates. You can then "calculate" your options and decide a course of action. Good luck.

kingstreet

The Halifax indexed valuation may not be as high as the estimate you put on the value of your home. You will be given the option of a drive-by valuation by a surveyor at about £90, or an internal inspection at £130.

If you are confident of the figure you mention, which would put your loan to value at 74% it may be worth the investment to get a better product.

Discuss the rate/LTVs with them when you call.

crazycatlady1984

nrsql wrote: »

You might want to calculate how much a fixed rate would actually cost. Take the fees as a percentage of the mortgage amount and divide by the numebr of years of the fixed rate, add that to the mortgage rate and it will give an approximate rate that you will be paying. Compare that to the SVR that you could default onto and decide whether you think it's possible that the rate could increase by that amount (actually averaged over the fixed rate so think increase by double the difference).

That will give you an idea of the camparison between the two and you can decide on your attitude to risk based on that. Remember also on a lower rate you can overpay more so the risk of an increase is reduced. I have been working on the assumption that any rate increase in the near future will cause too many defaults - but could be that individuals that can afford it will be targetted or companies will decide to reduce their book. BoI and Cyprus seem to me like test cases before others jump on.

I think the fees being charged now make a big difference unless you are fixing for a long term. E.g. 2000 fees on a 100k mortgage fixed 4% for 2 years pushes the rate up by 1%. That will also give people a chance to check whether whatI am suggesting sounds correct.

That's something I hadn't thought of; thanks :T

crazycatlady1984

Thanks all, will give Halifax a ring next week and see what they say.

Have a good Easter guys!