Help please advise me

kelly212

Hi, i have such a worry at the moment, my husband and i found a house and saw a mortgage advisor, i am self employed and my husband is employed, we were asked for proof of income including payslips and as i was self employed i was asked for proof of my gross income.

My accountant had my books at the time as she was doing this years tax return, when i asked her about this she said, i'm sure all mortgage companies usually need proof of your net income , the mortgage was agreed in principal but now the mortgage company are now asking for my profit and loss statements for the last 3 years.

The problem being, i have a very good accountant and i dont show very much of a profit at all, which is good for inland revenue purposes, but i am woried sick that we will now lose the house as the mortgage company will think we cannot afford it.

I am so cross with the financial advisor as he obviously should never have asked for Gross income in the 1st place,

I am worried that we will now not get a mortgage and that we will lose all fees paid so far.

But surely anyone with a good accountant tries to keep their net profit low so that they wont need to pay much tax???
and surely not all self employed peoploe get refused???

I would appreciate any advice please i am going out of my mind, i'm also worried that if we get refused it will affect our credit rating ?

soz if i waffled a bit

toonfish

they all work on your gross income - i.e. what you pay income tax on yourself. That is the problem with creative accounting.

If the lender will not advance enough you need to look again at someone who will do higher multiples, or assess it on affordability.

herbiesjp

For self employed - NET profit is the figure usually looked at.

Who is the lender in question?

What is the property price?
What is the mortgage amount needed?
What is your self employed NET profit?
What is your husbands gross yearly salary?

AndrewSmith

This is where it can become confusing for some people.

The actual figure that a lender will base self employed income on is your NET PROFIT or NET RELEVANT EARNINGS. This figure will represent the amount that you pay tax on, thus your gross personal income.

This can be confused by some with your business' gross profit, which is the amount before any allowable expenses are catered for. The GROSS PROFIT cannot be used for mortgage purposes.

kelly212

The purchase price is £184000, we have a 5% deposit = £9200
so we need a mortgage for £174800

The mortgage company is The Chelsea

So what figures do i need to provide?

I'm still confused

Do i state what my gross annual income is from the business before deductions of after?

kelly212

My husbands yearly earning is £21000 but my net profit is only about 5000, as i said i have a good accountant

Violet_Isle

Whoops that ain't looking too good on your behalf!

You say your net profit only shows as 5,000 - are you a sole trader? what do you think your REAL earnings are?

kelly212

yes i am a sole trader who because she was misadvised has been running as a limited company and paying herself a wage, so those earnings should also be taken into account, i guess, its all in the hands of my accountant at the moments

she said my net income should be approx 15k for the past 2 years wot do u think?

toonfish

kelly212 wrote: »

yes i am a sole trader who because she was misadvised has been running as a limited company and paying herself a wage, so those earnings should also be taken into account, i guess, its all in the hands of my accountant at the moments

she said my net income should be approx 15k for the past 2 years wot do u think?

even if your income was £15K I'm sorry to say you are still way off what you need. For the loan size you are looking for most lenders wouls want a combined income of around £45K