Mortage worry! House offer accepted.

TidyMax

Hello everyone.

My girlfriend and i have just had an offer accepted on our first house and the estate agent has said they need to see the mortgage within a week.

I am self employed/ the director of my ltd company and she is a primary school teacher. My business has been established for about 1 year and 6 months and in the first year i generated a loss (due to start up costs).

We are now panicking we wont get a mortgage.

The house is £105,000 and we have a £16,000 deposit leaving us with a total of £89,000 to borrow.

My girlfriend is on £21,500pa as is she in her first year of being a primary school teacher.

We have parents who have said they will be a guarantor also.

The whole process has left us feeling slightly overwhelmed and panicked, we are going to spend the rest of the day looking through mortgages online, ideally we wanted to go with the post office as they seemed to have some fantastic deals but when we applied for a meeting there earliest date was the 17th of June .

ANY help or advice will be very very much appreciated. Thanks to anyone who reads this and i hope you are all having a lovely weekend!

ACG

Why would you not see how much you can borrow before putting an offer in?

It looks like this will be based solely on your partners income unless you wait until you file year 2s accounts - but in order to get this property that isnt practical im assuming.

It will be very tight and very dependent on your current circumstances. I think you either need to see a broker or get on lenders affordability calculators. Off the top of my head I can only think of 1 this may pass with but a lot more info is needed.

I dont think this will be a case of finding the best rate, more a case of who will do it.

kingstreet

At this rate, you could spend three months running down your list of preferred lenders based on rate, to find at the end of it none of them will lend to you.

Post Office, Yorkshire Building Society, HSBC. Are they your top three in order? If they are, let me save you several weeks and tell you they won't take your income into account and your partner doesn't earn enough to go the sole route with any of them.

See an independent broker - no-one in an estate agency office and get some professional advice on what you can do. It will be cheaper and quicker than traipsing up and down the high street, real or online...

TidyMax

Because we are being fed crap advice left right and center and aren't too sure who to turn to for some decent help (re: me signing up to this forum!).

We made a joint account before Christmas to save for a deposit and started looking for houses last month just to get the ball rolling and we came across the house we have made the offer on.

We were told that there is no point applying for a mortgage until you have found a house but now we are finding out there is no point in finding a house till you have a mortgage.

We have been together for 8 years and i left my old job to work on my own as there was no way i could ever afford a house on my wage and now i can afford a house there is no way i can prove it for two years .

I spoke to my accountant and he mentioned possibly being able to do a set of interim accounts for this year to show how much i have made to date as obviously i have not had to purchase a van, tools etc this year.

Basic number crunching shows that i need to earn £9000pa to bring up our combined incomes to be loaned £90,000 which is what we will need. I have probably made that this year already and i think we will both have decent credit history as i have never missed a phone/insurance payment in the 3 years i have been paying for them DD.

Unfortunately my current account is usually in my overdraft as i have the terrible habit of just living out of my overdraft rather than paying it off so i don't know if that affects credit score?

I have just been looking at the experian free credit check deal that is on this website, do you think it would be a good idea to sign up to that and check?

Thanks for the reply.

Max

bowdeni

I'm currently going through this process, and it's an objective account of my experience, so I don't want to fuel your panic, but you should have realistic expectations.

I have two incomes, one salary and one self assessed like you. As soon as you consider a self assessed income, you already narrow down the market considerably, and as a result, my interest rate is higher than it would otherwise be.

Different mortgage companies count the different amount of years. I have three years of accounts, all showing a profit. However, the majority take an average. I have found one that allows me to skewer it more towards the most recent year (I have had good growth).

To prove the income, you will need to have done a tax return. Even my mortgage company will only lend based on the years I have done my full tax return and therefore have got a SA302 from HMRC.

If you have a decent accountant, and they are happy to sign of the books, then you may avoid the same path I've taken. So I'd recommend speaking to a broker to find out what your accountant could do for you.

EDIT: You need a mortgage broker. Don't waste your time looking at mortgages online. You won't even be able to tell from the websites who will lend to you. I'm using London and Country.

ACG

Interim accounts may help.

I would suggest you find a good broker, there could be options as things stand but you need to sit down with someone sooner rather than later to get the ball rolling.

TidyMax

Thank you very much for the advice ACG. I typed out a reply hours ago but i clearly didn't submit it!

I have spoken to a mortgage broker near us. He was extremely useful and we are getting going with the process tomorrow, we will probably be putting the mortgage in my girlfriends name and putting me on at a later date. Thanks for your help and replies today and i hope you have had a good weekend!

Also Bowden i missed your reply! Yes i feared as much, i appreciate online tools are useless as they are just showing me how much they will potentially lend not if they will lend. As mentioned above i have managed to speak to a broker and he sounded positive

Thanks for your reply and good luck with the business!

mosaicsquares

Mmmm, how did you go on with finding a mortgage?
Your situation sounds like mine in reverse, I'm a self employed (now housewife) earning zero profit, my partner earns just over £21,000. We have a big deposit and found we could get it in both our names with the post office...we didn't use a broker,, just followed the Money Saving Expert DIY whole of the market search.

kingstreet

mosaicsquares wrote: »

Mmmm, how did you go on with finding a mortgage?
Your situation sounds like mine in reverse, I'm a self employed (now housewife) earning zero profit, my partner earns just over £21,000. We have a big deposit and found we could get it in both our names with the post office...we didn't use a broker,, just followed the Money Saving Expert DIY whole of the market search.

Presumably because your partner's income alone covers the amount you need to borrow?

In which case, any lender would lend in those circumstances.

The OP's partner does not earn enough to do what you did, so they need their profit from self-employment as well.