Mortgage for Newly Self Employed

Lizbetty

Hi everyone!
I wonder if you might be able to help? Dh went self employed officially as of 1 May this year (very recent, then!) and we are hoping to move house, not upwards, just across iyswim!

We have £57k o/s and the house is worth around £160k, depending which estate agent you ask (varied from £150k to £185k!!!). We also have around £10k in savings which we are using at the mo just while dh gets well established. We're hoping to keep the savings in tact as much as possible, as we have 2 young kids and I feel nervous when we use the savings as it's a fall back fund, really!

He's doing the same job he left, just for himself instead - so if it went belly up, he could jump back into the same job working for someone else again.

His previous income was £21k pa, he's expecting it to be around £24k pa once he's got going.

As mentioned previously, we're not wanting to take out a huge amount on top of what we have, just shift across to a house of the same value - MAYBE borrow an extra £10k tops, worst scenario (which probably will happen, as it does when you're buying a house.) I rang IF.com just now, and they said that he'd need 3 months self employed under his belt to consider us for a mortgage. I wonder if this is pretty much the rule, or whether any other lenders might do it sooner?

We're desperate to get out for a number of reasons, nasty neighbours on one side being one reason, which isn't fun when you have two kids and they want to be out all the time. But that's another story...

All advice welcomed, I'd really appreciate your help. TIA!

Lucy

Dithering_Dad

I would imagine IF's position would be pretty standard - providers always seem to ask for 3 month's worth of payslips, regardless of whether you're self employed or not.

You didn't say whether IF was your current mortage provider, so if they're not then perhaps you shoudl contact them next as they might be more lenient due to your previous history with them.

You may find though that by the time you get your house on the market and find a buyer, the three months will have passed and you will be in a position to get a mortgage. Whether you ought to be moving house when you already have the financial burden of a new business start-up is another question. Remember, you also have to factor in the new mortgage arrangement fees, surevy fees, estate agent fees, solicitors fees and stamp duty as well as how much the new mortgage will cost you on a monthly basis.

Is there nothing you can do short-term about the neighbours to calm things down to give you a few month's worth of breathing space until your business is more established?

Lizbetty

Thanks for your reply. Unfortunately, short of burying him under the patio (which I had considered), there's nothing that'll make it easier with our neighbour!!! Plus the garden's far too small where we are, even though it's lovely location because we have fields behind - we need a bit more space outside whioch is ours, we can get this easily by moving areas without having to spend much more.

It figures re: the wage slips/proof of income, now you mention it. When I used to work in mortgages, we would only consider self emp if they had 3 years accounts, plus a projection!!!! It shows how much the market's changed.

IF.com are our mortgage provider at the mo- the current mortgage is in my sole name, although the 'plan' is joint now, so not sure if they'd give us leeway as dh would be a new mortgage customer, iyswim.

Thanks for your help, you're definitely right about time passing between getting the house on the market, it'll give us some breathing space no doubt!!!

Lucy

heckmondwike06

Lucy,
May I suggest that you look at self-cert mortgages as they don't need any checks however, rates might be higher! Also, the draw back is that you've to put down anything between 10-25% as deposit. With 25% deposit you're likely to get very competitive rate.

Speak to an IFA and confirm that they won't be charging you (bear in mind some charges as much as £3,000 in arrangement fees & £500 in consultation). I would also ask if they sell products from 'whole market'.

Hope this helps.