Which lenders should I look at?

jamiewakeham

Hi all

My wife and I are looking to move house. We owe £70k on our ~£220k house so I hope to bring a deposit of around £150k out of it. The house we're looking at is on the market for £384k, so if I can get it for, say, £380k, we need to borrow £230k. We have sufficient savings to deal with stamp duty, etc.

Making the repayments on the loan will be relatively easy, even if rates go up a couple of % - and anyway I'd probably look at a 4 or 5 year fix for now. The issue might be in persuading someone to make the loan.

My wife earns £44,500 in a very stable job. I currently work freelance, though, as a climbing instructor and physics tutor. I left a job as Head of Dept in a secondary school in mid-2011 because I was desperate for a change of pace, and intended, mainly, to finish the huge amount of DIY needed on the existing house for a few years. Because of that, my income over the last few years has been very low. In the tax year 2011-12, I had the last few months of pay from my school (£13k) and start-up costs meant my self-employment made nothing. In 2012-13 I only made £1500.

Since then I've applied myself to building up my business reputation - and am on track to make £20k this tax year, with every expectation I will be able to sustain this level. I can see that a lot of lenders will look at my last three tax returns, though, and not like the look of me. If it helped, I could convert some of my current freelance work into a temp contract worth about £15k per year, ending in June.

Any suggestions? Our credit ratings are both excellent and we have no children. A final issue is that my wife is 50 (I'm somewhat younger) - will lenders take on, for example, 20 year loans to her?

Thanks for any advice.
Jamie

Thrugelmir

How would you propose paying /settling the mortgage once your wife leaves full time employment? That's the problem you face regarding the extended term.

jamiewakeham

Well, we aim to overpay so that it's gone before she retires (we overpaid our previous mortgage by about £40k in ten years). But if it comes to it, I'll still have fifteen working years to go and as a physics teacher I can pretty much walk into a job, if the freelance stuff isn't paying enough.

I have little idea of how this sort of thing works; will explaining the above to a potential lender have any effect, or will they just want to plug numbers into boxes on screens and see if computer says yes?

Cheers
Jamie

Dave_Ham

I doubt anyone will name drop lenders, well anyone qualified to do such.

On the face of it, this is just about achievable although it becomes easier when you complete current year trading.

You need a broker I think, at least have a chat with a couple and take a view.

jamiewakeham

Thanks, Dave. You're pretty much confirming my instinct that our situation is complicated enough that I could do with a broker - I'd hoped to DIY the finding of a mortgage but we're a non-trivial case!

My urgent question (as I need to negotiate this now) - would I look any more attractive to lenders with an official, if temporary, contract for work from now till June? It won't make any difference whatsoever to my actual income or the reliability of that income, and will actually cost me several hundred pounds in tax as it's less flexible, but if it'll help with the mortgage application I'll do it.

Cheers
Jamie

Thrugelmir

jamiewakeham wrote: »

Well, we aim to overpay so that it's gone before she retires (we overpaid our previous mortgage by about £40k in ten years).

Lenders work on fact not fiction. Affordability is an issue that lenders themselves are now required to satisfy themselves on. The one certainty of life is uncertainty.

jamiewakeham

Well, true enough - but the fact is that if my wife retired when there were five years of a 20-year term to run, I would still have 15 years working life ahead of me and a job that I could walk into paying £40k. My income only 'looks' low because I deliberately took two years off to finish the house. But if what you're saying is that this is the attitude I will get from lenders, then it's useful info, so thanks.

So, a broker. My first instinct is to try L&C; are they going to be OK with a complicated situation like ours, or should I be paying for this?

Dave_Ham

L&C get mixed feedback on here, but as they are free (amongst over more commercial reasons I imagine) they do get vast exposure.

You may get lucky and get an advisor there who knows their onions, but equally you may not.

Do not try and manage your situation to meet criteria (and increased cost) speak to a broker (L&C or elsewhere) and given them your exact situation, for them to find a lender to meet this situation.

As I said previously, I would expect a fair solution based upon the limited information supplied currently.

Best of luck

amnblog

Lots of curve balls here Jamie.

As Dave says refer to a broker.

jamiewakeham

Will do - cheers.