Mortgage application advice needed

Ian2012_2

Hi
I need some advice on mortgage application.
I want to apply a mortgage with 70% LTV. I have been self-employed for the last 7 years with good profit each year. But I took a 7 month break between mid 2011 and early 2012 due to personal matters and then continued my work for the last 18 months. I therefore approached two mortgage brokers who claim to specialise in contractor mortgages to see if they can help. The first broker came back saying that he had checked with one lender and in principle they would be happy to process my application. So I decided to go with him. But the second broker, who took quite some time to get back to me, told me that he also asked the same lender and they won't accept my application due to my 7 month break despite I have worked again for 18 months since the break. The second broker didn't tell me which lenders he was going to approach until now. I am quite worried now. Does that mean my application won't be accepted by the lender now? How can the same lender give two opposite answers?

I am thinking of applying to another lender directly myself in case my current application is turned down. Is it a good idea to apply a mortgage to multiple lenders simultaneously? Will multiple credit searches jeopardise my application?

Any advice will be appreciated.

Ian

amnblog

You cannot guarantee that the lender got exactly the same message from the two brokers.

Rule #1 is only have one broker at a time working on your case.

Are you trying to underwrite the case based on your day rate rather than your dividends or net profit?

If so, the lenders don't like long breaks between contracts.

Wh05apk

Are you self employed or a contractor?

If you are self employed with accounts, the issue will be simply that your accounts showed a dip in profits, if your accounts for last year were ok, you may find a lender who only uses last years figures may work for you.

Ian2012_2

Wh05apk wrote: »

Are you self employed or a contractor?

If you are self employed with accounts, the issue will be simply that your accounts showed a dip in profits, if your accounts for last year were ok, you may find a lender who only uses last years figures may work for you.

I am a contractor. Before my break period, my yearly net profit (after tax) was around 90k. Because of the break, my last company year's profit was only 41k. This year (to end at the end of August, so the account hasn't been prepared yet) it will be at least 90k. But I have been taking small dividend each year, which means my declared annual income on sa302s has been smallish (around 40k each year) and left the rest of my profit in my company's bank account. Someone told me that based on my declared income, I would only be able to borrow 135k from a high street lender. I want to borrow 300k(70% LTV). That's why I went to the two brokers who specialised in contractor mortgages as they said I could borrow based on my hourly rate. Now I am worried given that second broker said because of my long break the lender won't lend even though the first broker told me it should be fine. The annoying thing was that the second broker, when spoke to me, just said he would do some research to see if he could find me a deal, never told me which lenders he'd speak to. Had I known he was going to use the same lender as the first broker, I wouldn't have bothered with him.

Will the second broker's inquiry to the lender screw up my chance if I use the first broker to submit the application?

Another question is: based on my situation, will I be able to apply to a lender directly myself?

Ian

Moonraker71

Hi, not an expert on this in the slightest, but just a bit of anecdotal evidence. My friend had some issues with getting a mortgage recently; he was in a similar situation in that he had taken very small dividends and retained profit in his company. He was refused a mortgage by Natwest, despite them being his business bank and despite his actual company making a net profit of more than 300k last year! They would only offer him a mortgage based on the £30k salary he drew. However, he did easily get a mortgage with Halifax under the same circumstances.

On the other hand, I had a real problem getting a mortgage with Halifax (self-employed but not ltd company) because they don't accept declining profits. I only have 2 yrs accounts and even though there was only a few hundred quid difference between my two years, they refused me on the basis that it was lower in the more recent year. Ironically, it was NatWest who offered me a mortgage in the end. If you have two or more years showing any decline in profits, they will base it on the most recent year, rather than taking an average of the previous 2 or 3 years.

Can you get your accounts done asap so that you have a more profitable year to show?

amnblog

Ian2012 wrote: »

I am a contractor. Before my break period, my yearly net profit (after tax) was around 90k. Because of the break, my last company year's profit was only 41k. This year (to end at the end of August, so the account hasn't been prepared yet) it will be at least 90k. But I have been taking small dividend each year, which means my declared annual income on sa302s has been smallish (around 40k each year) and left the rest of my profit in my company's bank account. Someone told me that based on my declared income, I would only be able to borrow 135k from a high street lender. I want to borrow 300k(70% LTV). That's why I went to the two brokers who specialised in contractor mortgages as they said I could borrow based on my hourly rate. Now I am worried given that second broker said because of my long break the lender won't lend even though the first broker told me it should be fine. The annoying thing was that the second broker, when spoke to me, just said he would do some research to see if he could find me a deal, never told me which lenders he'd speak to. Had I known he was going to use the same lender as the first broker, I wouldn't have bothered with him.

Will the second broker's inquiry to the lender screw up my chance if I use the first broker to submit the application?

Another question is: based on my situation, will I be able to apply to a lender directly myself?

Ian

A couple of the major lenders that specialise in IT contractors will not touch the case given that gap in contracts.

Therefore are some other lenders that are used less often by contractors that could be helpful. If you have been back on contract for at least 12 months I would be relatively confident this case could be placed.