80k deposit but cant get any type of Mortgage please help

nospaceforbaby

Hi, I am soon to be a Dad for the first time, my Wife and I live in a tiny 1 bedroom flat in London, its worth £255k but I have no equity in it after 8 years of ownership.

We need to buy a house to to the arrival of our first child, I also work from home so I need a quiet space away from my Wife and Baby in order to work - so we need at least a two bedroom place, I can work anywhere even a Garden shed but I need quiet as I am on the phone a lot.

The mortgage on this flat is £950 a month with a rental value of £1200 a month so we have decided to rent it out rather than sell it as if we sell it we will gain nothing, the sale price will only cover what I owe on the property so no gain can be made from selling.

I have saved up 80k in the last 12 months however we are unable to get a mortgage despite direct applications and whole of market broker searches because of my lack of a proof of earnings record, I am self employed and in order to save up the deposit I have declared very low earnings in order to minimise my tax bill - I had to switch to this model because I was unable to save anything in the way of deposit over 2011-2013 while on the previous tax model - my business was highly profitable working from home with low costs so any profit I made was then owed in Corporation tax - I worked for two years and was only able to pay our bills but not able to put anything aside as hoped.

So the tax planning has worked well in that I now have a deposit but it has backfired because it has meant I have declared very low earnings, too low to obtain a mortgage.

My credit score is now 907 or "excellent" however I do have two CCJ`s that were satisfied in 2012 - a hangover from debts in 2010 before I started my own company and when I fell behind on two bills.
My Wife`s credit score is excellent, she works for the company I set up so I was thinking I could increase her payslips to reflect a salary of say 100-150k P.A and we could apply for the mortgage with her payslips - she is worried that this could constitute a criminal offence however but I cant see how it could because she is a PAYE (non director) employee of my company so she is just the same as any other employee in that respect and we can put her salary up as we choose - the mortgage provider is only requesting 3 months payslips and one month`s bank statements.

This is the only solution I can think of so hopefully it will work? any comments or other ideas would be gratefully received please, I have been searching for weeks and I personally have been turned down for a mortgage of 250k by every broker and lender I have tried with due to my two old CCJ`s and the fact that my current salary states just 10k in annual earnings.

Thanks

PasturesNew

What sort of business is it? Would it be cheaper/easier to use a serviced office locally, rather than trying to get a mortgage/move right now?

nospaceforbaby

PasturesNew wrote: »

What sort of business is it? Would it be cheaper/easier to use a serviced office locally, rather than trying to get a mortgage/move right now?

hi, thanks - the business is an IT consultancy, the business is just me though, my Wife is listed as an employee, takes a wage but does not actually work on a day-to-day basis as she is pregnant.

I have looked at offices but they are start from around £400 pcm in the south London area, I feel this would just eat away at our deposit and we plan to have two children so really I am focussed on getting a house rather than trying to have a family in a one bed flat.

amnblog

If you are contracting in IT there should be options to place this case.

I suspect there are other factors you have not outlined here or I would have thought a good broker would place this case by now.

nospaceforbaby

amnblog wrote: »

If you are contracting in IT there should be options to place this case.

I suspect there are other factors you have not outlined here or I would have thought a good broker would place this case by now.

Thanks so much for responding, what else can I tell you ? - please connect me a with a good mortgage broker, I have tried two "whole of market" without success.

I am 33, Wife is 34 - we have no credit cards and outgoings of around 2k a month - car is paid off, no store cards etc - my credit score is 907 but two CCJ`s from 2012 both satisfied, her score is perfect.

I spoke to a specialist IT contractor mortgage broker who said they could not help due to the CCJ`s despite the fact they had been satisfied and my credit score had been built back up to "excellent"

The contractor mortgage broker understood my low salary/lack of proof of earnings as all contractors work in a tax efficient manner hence why so many work in this way rather than as full time employees, the issue for them was old CCJ`s - the mainstream lenders like Halifax can look past the CCJ`s but they want to see earnings record.

Feeling a bit stuck, any suggestions most welcome. thanks

amnblog

nospaceforbaby wrote: »

Thanks so much for responding, what else can I tell you ? - please connect me a with a good mortgage broker, I have tried two "whole of market" without success.

I am 33, Wife is 34 - we have no credit cards and outgoings of around 2k a month - car is paid off, no store cards etc - my credit score is 907 but two CCJ`s from 2012 both satisfied, her score is perfect.

I spoke to a specialist IT contractor mortgage broker who said they could not help due to the CCJ`s despite the fact they had been satisfied and my credit score had been built back up to "excellent"

The contractor mortgage broker understood my low salary/lack of proof of earnings as all contractors work in a tax efficient manner hence why so many work in this way rather than as full time employees, the issue for them was old CCJ`s - the mainstream lenders like Halifax can look past the CCJ`s but they want to see earnings record.

Feeling a bit stuck, any suggestions most welcome. thanks

Baffled by this.

CCJ's over two years old. Good deposit. How much are you earning per day on your contract?

Thrugelmir

What's your repayment vehicle for the mortgage?

Thrugelmir

amnblog wrote: »

Baffled by this.

CCJ's over two years old.

I would use the word concerned rather than baffled. CCJ's are red flags.

nospaceforbaby

amnblog wrote: »

Baffled by this.

CCJ's over two years old. Good deposit. How much are you earning per day on your contract?

Hi, yes its frustrating to say the least -mainly because if I do what I did this last year with the savings for another 3 years I can get a house at 300-350k with no mortgage, but saving/waiting would mean a pretty intolerable living/working situation with all three of us in the one room.

I dont have a day rate, I am working as a contractor contracting back to my own business.

I am a director of a ltd company but also a contractor providing services to that same company, I pay myself £3600 net a month regularly but have also paid myself several chunks of 20-30k net over the last few months in preparation for the deposit required for the mortgage application.

thanks

kidmugsy

nospaceforbaby wrote: »

We need to buy a house to to the arrival of our first child, I also work from home so I need a quiet space away from my Wife and Baby in order to work - so we need at least a two bedroom place, I can work anywhere even a Garden shed but I need quiet as I am on the phone a lot.

I have saved up 80k in the last 12 months...

.....I was thinking I could increase her payslips to reflect a salary of say 100-150k P.A ks

You obviously have huge sums of money slurping about.
Why not just rent a two bedroom place with a good "work shed" in the garden? If you do IT work by phone you presumably have a huge choice of where to live. In no time you will have enough capital to buy what you need in many cheaper places, no mortgage required. As for the flat, you could let it or just sell it. The notion that you shouldn't sell it because you've made no gain on it is just irrational.

nospaceforbaby

kidmugsy wrote: »

You obviously have huge sums of money slurping about.
Why not just rent a two bedroom place with a good "work shed" in the garden? If you do IT work by phone you presumably have a huge choice of where to live. In no time you will have enough capital to buy what you need in many cheaper places, no mortgage required. As for the flat, you could let it or just sell it. The notion that you shouldn't sell it because you've made no gain on it is just irrational.

thanks, it would be a huge sum if we lived somewhere else but in London/Surrey we need around 300-350k purchase price - ideally I would live somewhere else, I like mountainbiking and I would love to live in Wales in a house costing maybe 60k, no mortgage happy life - my Wife is Slovakian and again I could live in a mansion over there for about 200k euro - however my Wife does not want to move and has friends around the Surrey hills area, she is stubborn as hell and just shouts and cry`s if I suggest slovakia or somewhere cheap like the midlands where im from - I dont want her getting upset while pregnant so I am working 6 days a week trying to hustle a bigger deposit together for a 350k home in Surrey area. The flat is another issue, if I sell it I will break even and make no gain - if I rent it out I will gain as the property value rises but also I will gain maybe £100 a month in profit as the rental income exceeds my mortgage payment on it, the flat does not cause me any concern its just the issue of getting into a house locally ans securing the mortgage to do so, I was also thinking of getting an employed job again in order to get some earnings record back but this would be a drop in earnings of about 50% as my skills pay about 65k a year salary which would be at 40% tax on PAYE so I would be earning a lot less just to get some earnings record built up. Can anyone explain to my why I cannot just pay my Wife more, build up her payslips so that she can get the mortgage with her perfect credit score, 80k depos and payslips showing 100k salary on PAYE? THANKS