Can I borrow more than 4.7x income?

deaston

I'm self employed and, according to my accounts, my average net profit+director's salary is £75,731. That allows me to borrow £355,000, but we need £410,000 to get the house we want.

When I spoke to HSBC, the guy on the phone mentioned "plus the 15% you get £410,000." Perfect! But upon applying, they've turned us down (not sure why). Does anyone know what the "plus 15%" is??

The galling thing is that I've opted to pay my current £260,000 mortgage over 14 years giving me a monthly repayment of £1,600. The larger mortgage over 25 years would be £1,700 per month. Only £100 more!!

I've got a £325,000 deposit and no outstanding loans or cradit card balances. Anyone know if I'm likely to be able to get the £410,000 we need? We've had an offer of £740,000 accepted, so it's only 57% LTV.

Also, my partner doesn't earn too well (around £12k self-employed) and doesn't use an accountant. Is it better to try and borrow as much as possible on my own? Or go for a joint mortgage and hope his earnings help?

kingstreet

Average over what period?

Any dependents, childcare costs, ground rent & service charges, maintenance to previous partners?

All these will reduce what you can borrow.

As long as he has SA302s for the last two years, there are lenders who don't need an accountant to be used.

I suggest speaking to an independent broker as there are still lenders offering upto 5x before deducting things mentioned above.

deaston

Average over the last three years.

No, no dependents etc. My only outgoings are things like bills, food and clothes. In fact, my vehicle, insurance, travel costs and the like, all go through my company.

I was thinking of trying London and Country and see what they would say.

My partner has SA302s (as do I). I think HSBC turned him down as last year he had one contract who insisted on paying him PAYE, so he has a salary of £3,000 on his tax return. For some reason that confused them and they then said he failed their lending criteria.

kingstreet

You should work out your average over two years, not three. Most lenders take two years, unless the latest year is lower, then they'll take the latest year alone.

amnblog

As KS says, lending to the self employed varies wildly between lenders and you need a good broker to assist you.

deaston

kingstreet wrote: »

unless the latest year is lower, then they'll take the latest year alone.

I've just discovered this in the last half an hour. Bummer!

amnblog

The other tricky angle is that some Lenders consider post tax profit and some, pre tax profit.

If your profit has dropped for a definable one off reason rather than reduced trading, there may be potential to have that considered.

csgohan4

Also don't expect to get the best deals from the best buy tables being self employed from personal experience.

ACG

I would siggest finding a good experienced broker (proably not a cal centre ie L&C) and seeing what can be done.

There could be options but as ever its all in the detail and being self employed can make it more complex.

csgohan4

The broker I used was good and helped me get through the process quickly as a self employed business. PM me if you want their contact details.


Found him on MSE. Take your pick really, apart from Kingstreet who only deals face 2 face if you live near him/her.

deaston

When I split with my partner four years ago and wanted to buy him out of the house, I went to Halifax and they offered me something like £600,000 based on my accounts (which are pretty much the same as they are now) so it's frustrating that I'm now only looking at around £380,000.

Also, from an affordablility point of view, odd that HSBC where happy to remortgage me and reduce the length of the term to give payments of £1,600 per month, but won't consider a joint mortgage with a longer term at £1,700 per month.

I also really thought having £325,000 deposit and the fact I've over-paid my mortgage by £20,000 in the last year alone would count for something. How wrong I was.