Can we get a mortgage? Self employed, 1 non-citizen, but big deposit

incka

Hi,

We're ticking a lot of the 'it's complicated' criteria for getting a mortgage, so we're worried that no one will lend to us but want to see if anyone has experience in a similar situation of having a few negatives against them.

Firstly my wife is not yet a UK citizen. She's got permanent residency though and hopefully can become a citizen before the end of the year, but we'd like a mortgage before then. Her income is low as she's been a student and is around £8000 (NI threshold).

I'm British, but I'm self employed (own a company). Last year combined salary and dividends were just £16,600, this year (up to 1st April) it's going to be slightly over £30,000. £8000 of this both years was salary, the rest dividends. We'll be able to show this after early April on HMRC self assessment tax returns.

In our favour we'll have a big deposit, between £100k and £130k. However we live in London, so realistically this means our deposit will only be between 40% and 60% on a one bed flat. We're realistic so are choosing something small, relatively cheap and in areas that many people wouldn't consider - but maybe the bank would look down on those areas/flats?

And that brings me to an additional problem: the only affordable flats tend to be the type of properties that mortgage lenders don't always like. Either ex-council (we know we can't really do high rise even if that would be our personal preference, so things like 1930s LCC brick estates with walkways), or later low rise brick built stuff, or stuff that is badly in need of serious work to be habitable.

According to a credit report I've got a score of about 800 (only issue seems to be from about 6 years ago when I went over my credit limit one month) while my wife is 700, largely from not having as much history (just having had a credit card and phone contract for just over two years). Currently we've got about £11k in credit card debts, but as soon as soon as probate court finishes we can obviously pay this off. We've been paying a rent of £1180 per month without ever being late on payment for 2 and a half years, do mortgage lenders factor this in? Most of the mortgage calculators suggest our repayments would be about half this.

If this seems unlikely that we'd be accepted, should I go out and get a job and just have my wife run the day to day of the company? My wife could do this too, but she's planning on going to university next year. If so how long would I need that job for, and could I still add on the dividends from the company to that income?

To add a further complicating factor: We might be temporarily moving away from London for a year or two depending on where my wife gets into do a masters, so we'd need to be able to rent the place out during that time.

Obviously no one will be in the exact same position, but has anyone had a similar number of negatives against them and still managed to get a mortgage? Does anyone have any recommendations on how to improve our chances?

Thrugelmir

Establishing a better track record for your self employment along with clearing your debts are essential.

If you move out of London for a period of time. Then maybe better to purchase in that locality rather than rent.

incka

Thrugelmir wrote: »

Establishing a better track record for your self employment along with clearing your debts are essential.

If you move out of London for a period of time. Then maybe better to purchase in that locality rather than rent.

We should be able to clear the debts shortly, so that won't be an issue. I've been self employed for years (while I was also a student for instance) but it's only this year that income has increased. Will the £38k (after all applicable taxes) together be enough, or will they look at previous years and reject us?

My wife has clarified that moving out of London would be at most be for one academic year (about 9 months) so buying elsewhere to sell again in less than a year seems like a lot of hassle and potentially expensive given estate agent fees etc. We want to be in London in the long term, not elsewhere.

amnblog

Your income and lending requirements are too far apart.

If your self employment income is increasing, wait until you have another year's figures.

incka

amnblog wrote: »

Your income and lending requirements are too far apart.

If your self employment income is increasing, wait until you have another year's figures.

What kind of multiple could we get currently? We're willing to find something cheaper to get on the housing ladder, as paying over £14k a year in rent isn't ideal. If we have £100k to £130k deposit surely we can get a mortgage on something? Even just a mortgage of say £50k would allow to get a flat, would it be possible to get that based on current earnings?