Mortgage for the self employed

realmaverick

Hi guys,

My dad has applied for the right to buy and will receive a 60% discount on the price.

Because my dad is in a low paid job, I am going on the mortgage with him. However, I'm self employed and spend a lot of money on technology related to my job and as a result, it appears as though my earnings aren't great, when in actual fact I'm earning a decent amount of money.

The property is worth £100,000 and after discount he's going to be paying £37,000.

I can put down a deposit of up to £20,000 which would leave only £17,000 on the mortgage.

There's gonna be £60,000 equity in the property. Will that be of benefit when trying to get a mortgage on the property?

Am I going to struggle to get a mortgage? What is the best way for somebody who's self employed to get a mortgage?

Thanks a lot.

kingstreet

Have you lived in the property for at least twelve months, to be able to purchase the property jointly with a joint mortgage?

What is your income? Net profit for the last two years?

What credit commitments do you have, loan payments and credit card balances?

realmaverick

kingstreet wrote: »

Have you lived in the property for at least twelve months, to be able to purchase the property jointly with a joint mortgage?

What is your income? Net profit for the last two years?

What credit commitments do you have, loan payments and credit card balances?

I lived there previously for 14 years. Not for the past 10 years. This didn't appear to be an issue.

I actually got provisionally accepted for a mortgage, assuming the guesstimates of my previous years earnings were correct. But I have a feeling they're going to be lower. I need to contact HMRC for exact figures.

My accountant today suggested that we do a forecast as my next 12 months earnings are likely going to be double, but I'm not sure that will help.

kingstreet

Lenders don't accept forecasts, you will need your SA302s for the last two tax years to provide evidence of income.

The term of the mortgage will be tied to how long your father has until retirement, so this may be an issue if he is already close to retirement.

Under the rules of RTB, only a relative living in the property in question can join the tenant in exercising the RTB. Look for your own council's information, here's an example;-

You can make a ‘joint application’ to buy your home through Right to Buy with someone who shares the tenancy with you or with members of your family. They must have lived with you for the past 12 months.

http://www.bournemouth.gov.uk/Housing/CouncilHousing/Right-to-Buy.aspx

realmaverick

Thanks for the link.

Oddly the council passed everything without question but now obviously I'm a little worried. None of the forms mentioned the 12 month rule, they just stated that one party must be the actual tenant who is claiming the discount.

kingstreet

AFAIK the forms are standard. The RTB1 form is the same across England. During the vetting process, the council will look into the status of the applicants before issuing the S125 notice.

I suggest a google search for your council and "right to buy joint and 12 months" which is how I found the examples I picked from to get the above...

realmaverick

Thanks. As they've sent the S125 notice, accepting the application, should I worry?

kingstreet

I don't know, TBH.

I can't say what checks are carried out at what stage. It's not my area of the market, although I do know the basics from previous experience.