Self Employed + CCJ - Chances?

TheChillPill

Hi Folks,

I currently have a residential mortgage with TMW(Nationwide), which I've now had for 7 years. 1 month arrears in the last 12. Current 'value' of the property is around £170k (and should sell relatively easily based on the current demand where I am and the various improvements we've made - which I haven't accounted for in the valuation). Outstanding mortgage is £135k

We want/need to move to a different area and different house layout. I bought this house prior to getting married and having children, and whilst the house itself is a dream for young professionals ('dream' being a quoted word from 2 of the 3 agents we've had round), and the area perfect for the same - neither are 'child friendly'. In addition to that, my son was recently diagnosed with Autism, and the provision for that is practically non-existent in this area.

So, we want to uproot 20 miles up the road to a very family-friendly area with excellent provision for my sons needs, and a more child-friendly house.

I'm self employed, with 1 years accounts filed showing a profit of £12k - current year will show a profit of around £30k (though I can probably work extra to get this figure up if needed). My wife looks after the children and home, plus does some occasional freelance work which brings in around £3,500pa

I have 1 CCJ from 2012 (£800 - satisfied) and 2 defaults (both under £500, both settled) from the same year. We currently have £5k savings, which combined with the equity would give us around £40k deposit.

The properties we are looking at are typically around the £175k mark, so we're looking at a LTV of just over 75%.

We have considered renting, and that will be a last resort if necessary, but the rental market in that area is in high demand, and prices very much reflect that (especially for houses) - it would cost us at least £300pm more than our current mortgage repayment.

With schools in mind, we need to move no later than April next year, but if there's something I should be doing to get a mortgage between now & then, I want to start doing it. If we apply in January, I will have 2 years accounts filed and a healthier 2nd year profit to show.

So, what are my chances? Is there anything I can do between now & then that would greatly increase the likelihood of acceptance?

If you've got this far, thanks for reading :-)

kingstreet

Adverse credit x 3, a missed mortgage payment in the last year, one year's accounts and only £12k profit.

I would think your chances are very slim and the profit amount will mean any mortgage offered will be minimal.

You need time to pass and a bigger profit. Never miss paying your mortgage.

TheChillPill

Thanks for the reply Kingstreet - would the same apply next January (assuming today's criteria and availability, for the sake of argument) - at which point I'll have 2 years accounts, the most recent showing £30k profit, and no arrears in the previous 12 months?

kingstreet

Lenders average net profit, so £12k in 12/13 and £30k in 13/14 means £21k average. If that's enough for what you want to borrow, taking into account any deductions, I have no idea.

When the registration dates of adverse have passed three years, life will become easier but you have two issues;-

who will lend
how much will they lend.

When you get a bit further down the road, get all three versions of your credit file and put them in front of an independent broker.

TheChillPill

Thanks! Doesn't sound hopeful :-/

Dave_Ham

Not necessarily, as suggested you must continue to make the mortgage payments on time and put in sensible 2013-2014 figures.

I suspect this will need to be nearer £40k-£45k and then there are lenders (not many) that will take most recent year for income figures.

If you are carrying ongoing credit commitments and/or additional childcare costs, then your case will become less likely.

amnblog

If this move is key to your family - and it sounds like it is, engage a mortgage broker now so that you know exactly what you are dealing with when the time comes.

TheChillPill

Thanks all for the advice - I suspect we're probably going to have to go down the renting route for a few years (probably keep ours and rent that out to avoid 'falling off the ladder').