Printed SA302 form

makeitstop

looknohands wrote: »

Profit increases roughly 100% a year,
12/13 8k
13/14 £21k
14/15 £41.5k
15/16 £40k (6 months)
12 months would be 60k minimum based on contracts

So my spending is assessed on what I have made in 15/16 but my income is taken from 14/15.
Why can't I spend more?

It's a fair question.

amnblog

Our poster can spend what he wants but his income would be assessed by Lenders as £41,500 at best.

ACG

Im tending to find what lenders want for the self employed varies massively.
Some will not accept online SA302s, others will but want tax overviews with them others others will accept online ones alone there is very little consistancy.

With regards to bank statements, the last time I had an issue with online print outs was around 18 months ago and that was with a small building society who seemed to just be a pain in the **** about anything they could be.

looknohands

But that's clearly a flaw in how self employed applications are assessed right?

It's not even being indulgent or silly with money, if I invested all the additional into a pension it would look as though I'm spending well over my means when assessed against my £41.5k SA302. When in fact i'm being very good with money.

I'm just wondering if that's all they look at or do underwriters look into self employed cases and the possibility that some businesses are growing and the self employed might be spending more due to this.

ACG

Self employed ar typically assessed on gross profit or wages + dividends.
If you are sacrificing your income in order to grow the business then that will be reflected in what you can lend.

If you are throwing money into a pension rather than paying yourself "today" then you are not earning that money today and so its tricky to use it. Some lenders may take a view but I think its nly the minority (and typically smaller lenders).

Self employed applicants can be complicated. If you go to the high street they have a one size fits all approach, if you do not fit it then you need to look to lenders who are prepared to spend time looking at the situtation.

looknohands

I'm taking all of the income personally. My current income 15/16 is a lot more than last year so I am adding more into my pension to save tax, however funding a pension counts against affordability.

So If an underwriter looks at my bank statement and sees what I'm spending on my pension now on a bank statement in October 2015 it will seem very high compared to the most up to date SA302 which only shows income up until March 2015. How can an underwriter compare a bank statement that doesn't even correspond to the historic SA302?

Wouldn't it make more sense for them to look at my bank statements for Jan, Feb, March 2015 and see how my spending works against the SA302 then when I was spending money I earnt on that SA302!

kingstreet

Most lenders ignore pension contributions.

They also do not scrutinise your outgoings anywhere near as much as you seem to think. The media scaremongering about eating only beans on toast on the run up to a mortgage application was just that.

Lenders look at bank statements to check receipt of income and to look for undisclosed commitments such as credit, childcare, maintenance etc. "Normal" outgoings are averaged from ONS stats for the size of the household.

ACG

Have you had a mess around on affordability calculators? Most lenders do ask for gross annual income. They may ask if you have pension and student loan contributioons. Some will reduce the lending amount, others will not.

If you are ever in any doubt then its worth speaking to a broker to find a lender who can lend for your circumstances.