Self employed mortgage, own accounts

sharrison01

Many thanks in advance for any help that you can offer...

I've been self employed for the past 9 years since I started work straight out of university. I studied finance at university with a fifth of my course being accountancy and as my accounts have always been pretty simple I file my tax return myself every year. I purchased my first and current property at the peak of the property boom 6 years ago and obtained a self cert mortgage from a broker that I was assured was portable and have now found out is not (as a side question, is there a claim here?) I am currently considering moving to a new home with the intention of having a £75-100k deposit on a £300-350k property. I earned £41k in 11/12, £36k in 12/13 (with a 3mth sabbatical) and have earned £34k since April this tax year (13/14) and my wife is currently taking home £14k PAYE working 2 days a week after taking a year off on maternity pay. Neither of us have any adverse credit, we have a credit card on a 0% deal with £5k on it (home improvements), another credit card with £1k for day-to-day spending but I also have £25k savings that I keep aside for work contingencies.

What are our mortgage chances/options and where would be the best place for us to go? Obviously used a broker last time that did not go too well but am sure that was an anomaly rather than the norm.

holly_hobby

Lenders now tend to work off SA302s (even for Co Directors of ltd co's), but can ask to see the books as if necessary . So assuming you submit your annual SA and pay tax - you won't have a problem proving your declared income, 3 yrs SA302s may be requested, but many lenders work off much lesser time frames - so it'll be a suck it and see exercise.

Porting relates to the mortgage product (fixed, discount rate etc), not the underlying borrowings or the method of assessment they were originally issued under (ie self cert, which no longer exists for new borrowings) - I image the rate isn't blaze trailing given that it was originally a SC mge anyway.

Hope this helps ..

Holly

kingstreet

Order your last three years' SA302s from HMRC to provide acceptable evidence of net profit for a lender.

Decide on a lender or find a whole market broker you feel you can trust. Ask friends and relatives for a recommendation.

Thrugelmir

sharrison01 wrote: »

and obtained a self cert mortgage from a broker that I was assured was portable and have now found out is not (as a side question, is there a claim here?).

The 2008 financial crash turned the world upside down so to speak. Lenders can vary their underwriting criteria as they wish, so they did.

Even now you appear to be pushing the boundaries of affordability.

sharrison01

Thrugelmir wrote: »

The 2008 financial crash turned the world upside down so to speak. Lenders can vary their underwriting criteria as they wish, so they did.

Even now you appear to be pushing the boundaries of affordability.

I did not make myself clear here but will give the whole story - we sat down with a mortgage broker and specified that the mortgage had to be portable as we knew we would be moving at some point. He then offered us a mortgage with Legal and General who turned us down as my credit score came back poorly (we later found this to be due to fraudulent activity and it was immediately rectified). The broker then persuaded us to go with a "specialist" company called Rooftop as he said that this was our only option. This company we now know was subprime meaning that the broker tripled his take and we have been left with a mortgage that is not portable as we requested, although as you mention the "new world" has changed portability meanings anyway.

As for pushing the boundaries of affordability, am I to assume that you mean on the multiples of the numbers that I quoted? Would affordability not also have to account for other options as to spend under £1500 per month in mortgage payments is very affordable in comparison to renting a similar property. I also work in the financial sector so have been hedging my mortgage rate for the past 8 months anyway while the world was getting rather excitable.

Thrugelmir

Any new borrowing is always subject to current lending criteria. Porting is only with regards to the existing terms and conditions that are transferred to part or all of the new borrowing. So always at the lenders discretion, there's no guarantees. A common misconception.

GMS

Before you contemplate making a claim what was the self cert figure and what was your Inland Revenue declared figure?

Mortgage may well have been portable but Rooftop no longer exist. They were a subsiduary of Bear Stearns, a victim of the credit crunch along with many other US Investment Banks.

As has been said you need to get your last 3 years SA302's and speak to a broker.

Declining profits in latest year won't do you any favours.

Affordability is the key here and you may be pushing the limits.

kingstreet

sharrison01 wrote: »

the "new world" has changed portability meanings anyway

No, portability has always meant exactly the same thing.

The right to transfer a rate from an old mortgage to a new mortgage on a new property, provided you met the lender's criteria at the time.

You have never been able to move a mortgage from one property to another and there's never been a guarantee that a new mortgage would be granted if your circumstances had changed and no longer met the lender's requirements.

If you feel you should not have been placed with a subprime lender, make a complaint to the advisor firm in question.

sharrison01

Thank you all so much for your help - I'm utterly clueless when it comes to mortgages and have found your input most useful.

The affordability issue that some of you mentioned - would it help that I work from home so 90% of my utilities (gas, electric, water, council tax, tv/internet) are already accounted for in my net profit? This then obviously means that my disposable income is higher as these expenses would show much lower on my mortgage application forms.

Also, my income has always gone up annually but my 12/13 income was less because I took three months off when my daughter was born, although pro rata was more. Is there any way to allow for this and also include my current year's income which is again much higher price rata?

kingstreet

sharrison01 wrote: »

would it help that I work from home so 90% of my utilities (gas, electric, water, council tax, tv/internet) are already accounted for in my net profit?

No. These things are factored-in to affordability and a variation makes little difference.

The main things are;-

net profit (income)
credit commitments
dependents
maintenance payments
childcare
mortgage term.