first time buyer / self employed? Mortgage any chance??!!!

lollypink

Hi,

Im wondering if I will ever get a mortgage!!! I am 33 years old
I have been self employed for last three years and I also work two days a week as a teacher.

I earn approx £12k a year for teaching two days on top of nay profit from my business

Year 1: 2012 profit - negliable (was still working as full time teacher this year)
year 2 profit -£10k
year 3 profit (by jan 2014) - £28k

I have 20k saved up for a deposit. But I have two defaults on my credit rating from bad time in my life in 2009 one for £85 and one for £125.

What are the chances of getting anything? and what should I be doing to give myself the best chance? How much mortgage could I potentially get?

Thanks in advance

ACG

If you can get a 15% deposit then there will be options available.

Probably best speaking to a broker though but i would be confident based on the above that you will be able to get a mortgage - subject to the normal things (affordability etc) being ok.

lollypink

thanks for your reply. I have been reading horroe stories and thought I was doomed in the wasteful land of renting for evermore.....

ACG

You only read the stories of people who cant get mortgages.

Brokers place cases like this on a daily basis (although would suggest avoiding estate agent based brokers).

lollypink

thanks.

any idea on the size of mortgage I could get?

Anyone got any recomendations of mortgage brokers in manchester?

ACG

The loan amount will vary massively between lenders as some will use your main income and half of your second income, how they look at the self employed income will also have an effect on it.

Did you have an amount you were hoping for?

lollypink

Hi I was hoping for 150k ?

tBagpuss_2

I am self employed and am in the process of applyimg. So far as the self employed income in concerned,I was told that my lender (Nationwide) will use the either the most recent year's income, or the lowest of the last 2 years income, so on your figures, they would asses your self- employed income as £10K, so your total income would be taken as £22k. If you wait until you have another year of accounts then your income would (assuming you earn the same as he current year) be assessed as having income of £40K.

Start point is normally 3.5x income which would allow you to borrow around £130K at that point.

if you want to buy at around £170K your £20K is only just over 10% - if you can get a bigger deposit, you may have more options in terms of how much they will lend.

I would suggest using some ofthe online calculators as a first step (you don;t have to enter your personal details, so you can try different permutations of figures to see what you need to aim for)

lollypink

thanks .. so it might be better to wait til april 2015 then when I submit those accounts....

ACG

I think £150k is probably pushing it a little bit too much.

I would say depending on the lender and the overall scenario anywhere between around £85k and £130k would be possible. But it all depends on how the lender views the income(s).

lollypink

so I could get mortgage for £130k at a push with £20k deposit therefore look for houses under £150k? Or should I wait a year?