Mortgage advice please

crystal1330

kingstreet wrote: »

If you run your own business, you adhere to the lender requirement for a year, or two, trading record to evidence your income.

If you start trying to manipulate your employment to obtain a mortgage by deception, that's between you and your conscience, however, I'm not going to supply any more information which may be helpful in deception, or fraud.

No accusation intended, but just in case, I'm out.

Thats slightly over the top and dramatic dont you think?

Everyone should know what they need, in order to get a mortgage before applying for one, its not deception, its making it possible. If I was employed by someone and that salary meant I could never get a mortgage, I would be doing what I could to improve my situation so I could get one. If being a Director means I cannot get a mortgage, I will step down from being a Director! Something I have a legal right to do at any time.

Putting a family member as a Director is perfectly legal and something many people do, were not tax evading, were not failing to declare income, we simply want to buy a house in a time that mortgage are hard to come by for people that run their own business.

Whats strange is that after speaking to a mortgage advisor and asking him the exact same questions, I didn't get "accused" of trying to commit fraud, its ADVICE and advice isn't aiding or abetting one to commit fraud, especially when no fraud has been committed. Maybe a better grasp of the Law is a good idea before being so judgemental and dismissive to someone trying to get advice.

Sorry but I hate this judemental and "terrified to advise" culture, where you get shot down for asking a question a little out of the norm. And as someone who holds a Law degree and is on her BAR course, I get frustrated with the constant fear of breaking it!

Annisele

crystal1330 wrote: »

Hi All,

Me and my partner want to buy his parents house.

House is valued at £410,000. They have agreed to sell it to us for £300,000, with personal arrangements to re-pay the rest (through re-sell, development etc)

I think those "personal arrangements" may also cause a problem. Do you mean that the parents will retain some rights over the property? For example, that if you redevelop the property will they be entitled to some of the increase in the sale value? Or do you mean that you'll owe the parents £100k or so?

(Edit - scratch that, I've seen OP's other thread now. Seems the plan is ultimately to redevelop the house, sell it to an unrelated third party, and have the parents keep the current £410k value and the OP and her partner benefit from any increase in the value due to the redevelopment.)

I'm also a little confused about the family member shareholding thing - it sounds to me like you might be shadow directors, or that the shares might be held on trust for you.

(FWIW, I don't think kingstreet is being over dramatic - you do sound to me as though you might be sailing just a little too close to the wind. Presenting your case in the best possible light is one thing, but signing your business over to somebody else so you look different to lenders is most unusual.

Edited to add: I assume you're not actually practicing yet - if you were, you might be a little more sympathetic towards the mortgage brokers on this site. They can't give you actual advice - both because the rules of this board don't allow that, and because their employers' compliance teams would throw hissy fits. And in any case, if they're giving out information freely, they can choose what they what to say and who they want to help...).

thequant

crystal1330 wrote: »

Hi All,

Me and my partner want to buy his parents house.

House is valued at £410,000. They have agreed to sell it to us for £300,000, with personal arrangements to re-pay the rest (through re-sell, development etc)

We will have a £100,000 deposit in 6 months or before but we want to buy in 6 months.

We are both currently Directors and this is where it gets tricky. Believing we was not going to buy for a long time, my partner has been on a very low wage and the rest of the money goes back in to the business, instead using the extra money to employ more staff. We live rent and mortgage free, so it was the only way we could save for a while.

My business is new and wont have its first year accounts submitted until Jan 2015.

However from last month we both changed the directors of the companies and increased our salaries. We are on the PAYE. He earns £4,000, so pays substantial tax and I earn £2,000 through PAYE but I am also a student and receive £9000 per year, £3000 in non-repayable grant and £6000 in loans.

We want to apply in about 6 months, so we would have been employed with a decent salary for a £200,000 mortgage for 7 months.

Our loan to value will be a 50%.

I am wondering if the fact directors were only changed recently, if that will follow us and we will still be in the "self-employed" bracket. How exactly does it work when you are working for new company but your nothing to do with it and are employed, with wage slips and tax payments to prove it?

Thanks!

Very messy and tricky, not sure about the set up of your company(s) (can you provide more details, e.g. no of employees, nature of business)


Changing directors might actually prevent you from getting a mortgage.


I set up a company earlier this year, despite not having any accounts I have been approved for a mortgage.


Their are companies who are mainstream lenders who specialise in this area.


They recognise that directors have nominal incomes, so will take dividends into account. However the bank you need you to be in control of those dividends by being a director!

kingstreet

crystal1330 wrote: »

Thats slightly over the top and dramatic dont you think?... I didn't get "accused" of trying to commit fraud... Maybe a better grasp of the Law is a good idea before being so judgemental and dismissive...

Sorry but I hate this judemental and "terrified to advise" culture...

I'm an authorised and regulated advisor and sometimes it's better to bow out of a thread, having said as much as I feel comfortable with.

In your case, that point came and I said I was making no accusation but I felt unable to continue to supply information which could be used by anyone reading this thread now, or in the future, to circumvent rules and procedures in place for very good reasons.

You have elsewhere sought the advice of someone with whom you have a client relationship. You do not have that with me. I do not know you and have little but the scant information you've provided and I'm expected to be able to provide "advice" which is a regulated activity with "know your customer" rules?

At this point I'll stop being "over the top and dramatic" and bow out of your thread.

ethank

If you have 'personal arrangements to re-pay the £110k' - this is not a gift, it is a loan. Your family members will have to sign documents stating that there is no loan. As far as the lender is concerned, the only loan that is possible is the one they are offering.

monty-doggy

If your oh only earns £4000 how is he paying substantial tax?

getmore4less

Fiddling with company ownership(to make getting a mortgage easier) and private loans(avoiding SDLT)

Doesn't come much more dodgy that that.

getmore4less

just read the other thread, I fear I was wrong.

business is development

looks like this is a development hidden as a PPR to avoid tax as well.

monty-doggy

If they only earn £13k between them they won't get a 200k loan. However as I suspect might be the case, if they earn £6k a month between them (unclear above) why would the op be using student loan and non repayable grant? Sounds dodgy to me.


Edit: just read the other thread, op does indeed receive £2k a month wages and her oh £4k.

Something not right here!

Annisele

getmore4less wrote: »

just read the other thread, I fear I was wrong.

business is development

looks like this is a development hidden as a PPR to avoid tax as well.

Doh, I hadn't thought of that - I agree that it does look likely on the (limited) facts we have so far.