Self-Employed Mortgage and Options

RichXTuta

Hi all,

Been a big fan of MSE for a long time but this is my first and probably most vital post on this forum, was wondering if you'd be able to help me with an ongoing issue with myself and a close friend obtaining a first-time mortgage.

The situation is thus: myself and my friend have been saving for a mortgage for around 19 months and are about to reach our deposit target of £54,000 (30%) in about 4-5 weeks for a £180,000 property (this is just a test figure to be able to afford the new builds in our area).

We're looking for a 2/3 bedroom semi or fully detached new-build house in Northampton. We're also planning to fund the next £36,000 with Help to Buy (20%) (provisionally spoken to them and they said it could be done in such a fashion). This would lead us to get a £90,000 (50% mortgage), relatively low right?

The issue is thus - I became self-employed as a financial contractor on February 2014 and now feel as if I have been completely black-listed by lenders because of this. My salary yearly is around £60,000 gross (depending on tax reorganisation) and I have an impeccable credit record stretching back around 5 years. I have also been in regular work (without break) since August 2012 as a permanent employee, a temporary employee, and a self-employed contractor since February 2014. My friend also has a spotless credit record. My friend earns around £20,000 gross in a temporary but normally employed position. Our plan was to do it solely on his salary and transfer my name to the deed later on but are finding this just isn't quite enough for a 50% 90k mortgage. We're getting figures around the £75k mark at the moment.

It's incredibly frustrating being as by the time I have 2 years accounts as I have already saved such a proportion of our deposit I wouldn't even need a mortgage by the time this period rolled around. (February 2016).

So if anyone has any suggestions they would be very warmly welcomed - please do ask me for more information if it will help and I'd be happy to provide it.

Kind regards,
Rich

Dave_Ham

This will be tricky, but given the information provided; I think you can expect a solution.


Have a chat with a broker (or another if already spoken to one to get the £75k)


A lot will come down to the detail of your position, although on the face of it could fit a few lenders.


Best of luck

RichXTuta

Something else I'd like to ask - how difficult would it be to have someone else who's permanent and would easily fit the bill to be the second applicant with any lender to take the mortgage in my name if you like. Where they'd be on the deed/mortgage and would have no further to actually do with the property - simply in terms of ownership until the point where I reach 2 years accounts and would like to transfer the deed?

Is this possible?

Albert_Tatlock_2

Might a specialist broker be able to help?

Someone like these?

http://www.contractormortgagesuk.com/

RichXTuta

Albert_Tatlock wrote: »

Might a specialist broker be able to help?

Someone like these?

I've had a look but I've been put off by the interest rates - it seems unfair to have to pay them considering both our spotless credit records and very large deposit. I'd ideally like to go with a high-street bank if possible - if anyone had any experience in dealing with them and being able to explain your personal circumstances I'd love to hear it?

Thrugelmir

RichXTuta wrote: »

The issue is thus - I became self-employed as a financial contractor on February 2014 and now feel as if I have been completely black-listed by lenders because of this. My salary yearly is around £60,000 gross

If you are self employed then you don't have a salary. Until you've a years trading under your belt it's merely a forecast as far as any lender is concerned.

Albert_Tatlock_2

I think Halifax might be the most accomodating. I'm in a similar(ish) employment position and they seemed willing to make an offer with 1 Year of accounts..........Perhaps a combination of SA302 for as far back as you can and Accountant's Certificate for a further year's projected income might satisfy them.

Alternatively, a 2-year fix with one of contractor mortgages might be slightly more expensive but at least it'd let you build up some more accounts.....take it out over 25 years to keep initial payments as low as poss....then reduce the term when you switch to a high-street lender after that?

Funny_old_game

It's less than remote a high street lender would touch someone with little history. Lenders like trends over years hence generally 2 to 3 years as a minimum.

On your point, if your providing any of the deposit and living there but nit in the mortgage, again you'll struggle. The solicitor will conduct an audit trail of the deposit also.

By overcoming one problem you hit another, maybe you should wait 18 months.

RichXTuta

Funny_old_game wrote: »

It's less than remote a high street lender would touch someone with little history. Lenders like trends over years hence generally 2 to 3 years as a minimum.

On your point, if your providing any of the deposit and living there but nit in the mortgage, again you'll struggle. The solicitor will conduct an audit trail of the deposit also.

By overcoming one problem you hit another, maybe you should wait 18 months.

Ah I'm glad I've asked that now - I'll avoid that idea then.

RichXTuta

There's something else I'd like to question - would it be possible to reveal that the majority of my income comes from self-employment, but to obtain a part-time permanent job just to up our combined incomes from 75 to 90k? I believe something as small as a 6k a year perm salary would do the trick, or would lenders brush this aside?

jlf_85

Just to add my own insight, I applied as a single applicant using income from self employed and employed, the amount they have said they will lend isn't brilliant but it might help to increase your amount a little bit.