Mortgage advice - First time buyer - large deposit but self employed

snowydogh

Hi everyone

Looking some advice as I'm new to all this.

Basically the situation is this: OH owns his house outright - no mortgage - has never had a mortgage. We've decided to sell his house and move to a newer house. House is on the market less than a week and have two viewings lined up already. House valued at £130K (would have been more if it was modernised - one of the reasons we're moving) ...

We are considering a couple of options

1) If it sells for the asking price, we will look to get a house at around £115-120K so as to clear his £9K debt.

2) We will put down a £100-110K deposit and try to get a smaller mortgage. We have seen a couple of houses in the £140-£150K range, therefore requiring a £40-50K mortgage.

He wants to clear his debt and we need to save to get married.

Despite being in a job that's seen as well paid, the company I work for do not pay me well. Furthermore, I'm self-employed (Difficult situation to explain - I work for them in principle but they set me up as self employed - obvious reasons I'm sure and one of the reasons I'm looking out) . I make around £1200 (Net).

My partner only works Part Time and only makes approximately £800-900 per month (Net).

My partner has recently got a second part time job however work is a given every week, more on a first come first serve basis (telephone Mon mornings to book in work for that week). He's also looking for a full time job with better pay.

I have recently began doing my own pieces of work on the side of the work I do for the one company. The nature of the work I do I could be bringing in £4000-£10,000 per project (gross), however I'm not at that level yet, but that's what I'm working towards. In addition to this, I'm looking for another job in the range of £25-30K per year (about average for the type of work I do at my level)... I'm constantly looking for opportunities in my field - will see where it goes.

What I'm basically trying to say is, we don't have great income at the minute but we are working on improving this.

I'm looking advice on what I need to do and what the best way is to apply for a mortgage? I'm new to this and despite having his own house, so is my partner.

Any advice at all is much appreciated

[Deleted User]

Your financial situation is questionable, you're bringing in ~£2000 per month with no mortgage/rent costs but have ~£10,000 outstanding debt (up from £5,000 last year)? You earn enough to take out a mortgage for the amount you need (£50k on £18k salary) but your financial situation is not good and may cause affordability issues: if you're in debt now what's going to happen when you have mortgage costs? Even if you pay off the debt that won't magic away whatever is sinking you into further debt. You'll need to explain more about your financial situation (commitments, expenditure) for a better idea of what is possible for you.

(If the debt is in your partners name in theory you could just not mention it and take out the mortgage alone, but I'm assuming your partner will want part ownership of the property and that you're paying towards the debt in some way, otherwise where is your money going?)

snowydogh

citricsquid wrote: »

Your financial situation is questionable, you're bringing in ~£2000 per month with no mortgage/rent costs but have ~£10,000 outstanding debt (up from £5,000 last year)? You earn enough to take out a mortgage for the amount you need (£50k on £18k salary) but your financial situation is not good and may cause affordability issues: if you're in debt now what's going to happen when you have mortgage costs? Even if you pay off the debt that won't magic away whatever is sinking you into further debt. You'll need to explain more about your financial situation (commitments, expenditure) for a better idea of what is possible for you.

(If the debt is in your partners name in theory you could just not mention it and take out the mortgage alone, but I'm assuming your partner will want part ownership of the property and that you're paying towards the debt in some way, otherwise where is your money going?)

Thanks for your comments, appreciate the quick response. This £9K debt is my partners. It is also his house that we are selling therefore if we get the asking price, the £130,000 is his money. The debt was from a car that he wrote off about 5 years ago - when he was young and foolish. He's been paying it off (small amounts), however once he has sold his house and paid off his debt, we will have no other outstanding debt and we don't anticipate anything that would cause us to go into further debt.

I'm not sure on where you got the 'up from £5,000 last year' ... I haven't wrote this anywhere in my post? Bit confused.

The debt hasn't risen and he's been steadily paying it off ....

The debt is in his name from before he met me .. I don't know a great deal about it. He has no other debts other than that and I have no debts.

In terms of my money, I have some savings, contribute to my parents household (I live with them now), pay my car insurance (own my car with no loan) and the usual food, petrol etc etc).

ACG

You need to sort out your jobs before looking at taking on a debt, no only for yourselves but for the lenders.

If you go self employed you need a minimum 1 years account.
If you go employed (or stay as you are) then you can probably get a mortgage now.

But i would think strongly about your income situation before going any further.

snowydogh

ACG wrote: »

You need to sort out your jobs before looking at taking on a debt, no only for yourselves but for the lenders.

If you go self employed you need a minimum 1 years account.
If you go employed (or stay as you are) then you can probably get a mortgage now.

But i would think strongly about your income situation before going any further.

I'm working on that at the minute. Looking for a more appropriately paid job where I'm employed. In the meanwhile, being self-employed and developing my skills and experiences to take on larger projects not related to the company I'm working with.

My partner is also working on getting a better job or position.

If we aren't able to get a mortgage, then we'll more than likely wait till we get the asking price for his house and just look to get a house of similar value and continue as we are now.

EDIT: I have annual accounts - I've been self employed for a couple of years now.

Thrugelmir

Is the debt registered with a Credit Reference Agency?

Won't look very good if the the debt is being repaid at a snails pace when applying for a mortgage.

snowydogh

Thrugelmir wrote: »

Is the debt registered with a Credit Reference Agency?

Won't look very good if the the debt is being repaid at a snails pace when applying for a mortgage.

I'll have to ask him this.

What if we sold his house first and paid off his debt .. whilst living with my parents/renting a small flat for a few months. We've seen a house for £140K we're keen on and we are hoping for a around £40K...

BOWSER

snowydogh wrote: »

I'll have to ask him this.

What if we sold his house first and paid off his debt .. whilst living with my parents/renting a small flat for a few months. We've seen a house for £140K we're keen on and we are hoping for a around £40K...

Personally, I would do what you have suggested...Sell the house, clear the debt, move in with your parents for 3 months, check your credit rating and try to improve it (if needed), get all your paperwork in order and then apply for a mortgage on a new place.