Interest Only Lifestime Morgage??

Caladan

Have you spoken to a Mortgage adviser about your borrowing power? Different lenders look at self employed accounts differently (HSBC for example uses the lower of the average of your last 3 years net profit/gross drawings). You may not be in as weak a position as you think.

Gunstar

Caladan wrote: »

Have you spoken to a Mortgage adviser about your borrowing power? Different lenders look at self employed accounts differently (HSBC for example uses the lower of the average of your last 3 years net profit/gross drawings). You may not be in as weak a position as you think.

Do any others work like that? Not a fan of HBSC!

dunstonh

Gunstar wrote: »

Thanks for the input, basically I'm self employed and my friends (full-time employment) have been offered mortgages for 60-80k more than me and I earn double by myself than what their households earn (two people.)

It's not fair the way they do it and I was looking at other potential avenues to get the amount I need.

That suggests either legally or illegally reducing your income for tax purposes. A self employed person with three years books showing relatively consistent income will be able to borrow the same as an employed person.

However, if you not declaring things for income (such as cash payments) or you are putting through more expenses to reduce your income for tax purposes then you effectively earn less.

Or perhaps you are mixing up turnover with income. i.e. your turnover may be high but that isnt what you actually earn.

_Andy_

Gunstar wrote: »

I think that's what I was reading about! Shame they don't do them anymore, thanks for the reply though!

Self-cert relates to how income is taken into account. Not whether it's interest only or not.

Caladan

Gunstar wrote: »

Do any others work like that? Not a fan of HBSC!

I'm offended

But seriously, talk to a Mortgage Broker.

dunstonh's post is good - especially the part about Turnover/Income.

holly_hobby

Open ended interest only mortgages (which were not the same as a lifetime equity release mge) did exist several yrs ago ( YBS were one of the lenders whom marketed them), but they bit the bullet when the FS and mge industry started to unravel - they were available to both employed, self employed and retired (with supporting income of course). So thats a strike out on that option.

You say that you earn more than your firends, but that they can borrow more than you, which isn't fair.

Thats because you mititgate your tax by declaring lower income, whilst they obv declare a higher income which results in them paying more income tax than you ... so what you've gained on the swings you've lost on the roundabouts I'm afraid. Which to be fair is typical for SE individuals, and why Self Cert mges were originally launched (where they were originally only actually available to self employed peeps).

Not sure if you're a ltd co and your assessment has been based on SA302s (ie declared income), if so you may want to consider Clydesdale Bank, whom will look at net profit, which may make a difference.

By the way interest only term is only capped at 65 yrs old with HSBC, other lenders whom still market IO, have an across the board max age of 75 yrs (except a couple of lenders whom offer an extended max age past this) - but as stated unless a ridiculously low ltv, you will need a repayment vehicle of some kind (which generally excludes selling the house itself !).

Even if you qualify for a fast track application (where verification may not be requested), your declared income would need to be what you declare to HMRC, so even that wouldn't work.

Given your situ, I do recommend an hour or so with a broker (take your credit reports with your from all 3 agencies).

Hope this helps

Holly

Gunstar

dunstonh wrote: »

That suggests either legally or illegally reducing your income for tax purposes. A self employed person with three years books showing relatively consistent income will be able to borrow the same as an employed person.

However, if you not declaring things for income (such as cash payments) or you are putting through more expenses to reduce your income for tax purposes then you effectively earn less.

Or perhaps you are mixing up turnover with income. i.e. your turnover may be high but that isnt what you actually earn.

I have an accountant who does everything properly thank you! I was told I was offered less due to be self employed not my income!

holly_hobby

No, thats incorrect, or maybe lost in translation.

You were offered less based on your income ... lenders don't have different income multiples wholly depending upon if you're employed or self employed (as that would be discrimination), affordability/max borrowing, is always based on the applicants income, which in your case appears not to have been sufficient to support the loan requested.

Try Clydesdale, whom working on net profits (as oppossed to drawings/divs, etc) may be another alternative to the desired solution ...... although if your accountant has also got your net profit right down, offsetting everything possible (and that is their job), you're a bit scupperered, but should be able to save a decent deposit, if on nothing else than the income tax your saving !

Unfortunately us self emp peeps, can't have it both ways I'm afraid ....

eg - earn the same as our employed pals, but pay much less tax due to our SE status/availablility to offset costs that our employed pals can't. Yet want to be able to have financial applications based on the same salary, and what we essentially don't declare for tax .... unfortuately since the demise of self cert for all classed, those options are now long gone (sob !).

Hope this helps

Holly x

dunstonh

Gunstar wrote: »

I have an accountant who does everything properly thank you! I was told I was offered less due to be self employed not my income!

If you earned the same as your friends then you would get the same amount. Everything suggests you are not earning the same as your friends. Either by tax mitigation (by fair means or foul) or you are mixing up turnover with income.

You were not offered less by being self employed. You would be offered less because of your income. One of the consequences of being self employed is that if you reduce your income for tax purposes (by fair means or foul) you are reducing your income.

Whatever your account says is your income is what the lenders use. If an employed person has the same income, they would get the same.

Annisele

Gunstar wrote: »

I have an accountant who does everything properly thank you! I was told I was offered less due to be self employed not my income!

As others have said, it won't be because you're self employed.

There are other factors on top of income. If your employed friend is single with no dependents and no debts, and if you're supporting six ex-wives, twenty children, and twice your salary in unsecured debt - he'll be offered more than you.