Best Approach For Self-Employed Mortgage?

TCA

Apologies in advance - long post warning!

Having returned to the UK 2 years ago after several years overseas, I should shortly (after submitting last year's tax return) have 2 years of SA302's available for my self-employment. My wife doesn't work.

I'm looking for a steer as to best route for a mortgage now or even wondering if I'm better waiting a further year, although it's likely that my income will be less than years 1 and 2.

I'm on the electoral roll and haven't checked my credit reports (via Experian etc) but I will do. I've never been in debt with the exception of a mortgage about 20 years ago - the property was sold and mortgage paid back within about 7 years of purchase. So I'm not strictly a first-time buyer. I've held a bank account with RBS for around 24 years (been overdrawn once by a tenner) and also a credit card with them for the same period and always repaid the amount borrowed every month without incurring interest. I've been using the credit card consistently over the past 2 years and they've raised my credit limit twice in that time, although I don't need it. I have no loans and sufficient cash to take on a 40%-50% LTV mortgage. I'm 47 years of age.

My self-employed income isn't great but I also have decent income from savings accounts and dividends, which some mortgage calculators seem to include and others don't. The RBS mortgage calculator does include them and averages the last 2 years self-employed income and so produces wildly different borrowing amounts from the equivalents of the likes of Nationwide and Santander.

http://www.rbs.co.uk/personal/mortgages/g2/how-much-can-i-borrow.ashx?view=int

My own bank RBS, might therefore seem a good bet. So,

(1) Can someone please give me an idea of how savings interest and dividends are viewed by the mainstream lenders and are their online mortgage calculators a true reflection of someone's borrowing ability?

(2) Irrespective of the answer to (1), would I be better contacting a mortgage broker anyway, given the self-employed/2 years SA302s situation?

(3) Is 3 years worth of SA302s better than 2 years, even if self-employment income is declining?

(4) My wife doesn't work but would be classed as a first-time buyer. Any angles to consider there via a joint mortgage?

Thanks in advance for any replies. Any specific lender/broker recommendations would also be welcomed.

Let_Us_See

TCA wrote: »

would I be better contacting a mortgage broker.

Lots of questions, but no real obstacles.

Quite simply, see a broker.

amnblog

1) Not dividends from investment - your business, yes


2) yes


3) it widens your options but is not key


4) No

TCA

TCA wrote: »

(1) Can someone please give me an idea of how savings interest and dividends are viewed by the mainstream lenders and are their online mortgage calculators a true reflection of someone's borrowing ability?

http://www.rbs.co.uk/personal/mortgages/g2/how-much-can-i-borrow.ashx?view=int

amnblog wrote: »

(1) Not dividends from investment - your business, yes

Thanks amnblog. What about income from savings, as mentioned in the RBS calculator?

Just generally, in my situation (as self-employed with 2 years SA302s), is that something that the mainstream lenders would entertain?

Daft question maybe, but is the term "first-time buyer" strictly applied, or do any lenders include those who have owned in the past but have no current property ownership?

amnblog

Savings - no generally (savings can be spent)


SA302s yes

TCA

amnblog wrote: »

Savings - no generally (savings can be spent)

Thanks, that's what I thought. Which is why the RBS calculator threw me a bit. They ask for "other annual income", which they define as "other income could be from savings, bonus, dividends etc".

If nobody can answer for RBS specifically, I'll ask them directly. It could make a difference as to how much I can borrow.

I edited my last post to throw in another perhaps daft question. Is the term "first-time buyer" strictly applied, or do any lenders include those who have owned in the past but have no current property ownership? Would be useful to know from the outset.

amnblog

Forget FTB it makes little difference to anything.

TCA

amnblog wrote: »

Forget FTB it makes little difference to anything.

Cheers. Looking at the deals around, my inclination at the outset is to go for some sort of fix (maybe 5 years) over a total term of around 10 years. Depending on how lenders treat self-employed income, most recent year or average or some other method, will have a major impact on the borrowing amount.

amnblog

Step One - who will do the case


Step two - what rates do they have

TCA

amnblog wrote: »

Step One - who will do the case

Step two - what rates do they have

Thanks. I'll make some approaches to brokers and see what results. Was just after an idea of what's the main basis lenders use for gauging self-employed income. i.e. over how many years. If it's current year only, that would limit my borrowing ability severely.