A few questions (applying for mortgage)

edited 30 November -1 at 1:00AM in Mortgages & Endowments
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edited 30 November -1 at 1:00AM in Mortgages & Endowments
I am going to see if I can get the mortgage I need in about 6 months time.....

I have a few questions to do with earnings and how a lender views them:

Firstly - I am self-employed and employed. My employed work is what I guess you would call 'Temporary' work. I am not contracted, but I work 5 hour days, 5 days a week, and have done for almost 3 years. I can increase and decrease the hours I work, it is flexible and works well with running a business.

Employed earnings:

1. I was wondering how a lender would look at my employed earnings. I assume they would want to see a P60 and not just the last 3 months payslips? I just wondered if there is a possibility the lender could determine a salary based on the latest 3 months pay? if so - I'd just work my socks off for those 3 months to boost what I could be lent. I assume that you have to state your tax year earnings and that they will want to see a P60?


Self-Employed earnings:

2. Does the lender look at the latest years self-employed earnings and determine what they lend you based on that year? or will the lender look at your previous years earnings too and work out an average?

Say I apply for a Mortgage in May 2016:

Say I'd earned £20,000 (2014-2015)
Say I'd earned £30,000 (2015-2016)

Which figures matter?


Thanks for your help.

Replies

  • ACGACG Forumite
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    Employed - It varies, most will ask how much you earn annually. You could probably find lenders who will go off the last 3 months payslips and other lenders who will go off your P60.

    Self employed - Again, it varies. Most will average out the last 2 years figures but there are lenders who will average 3 years or just use the latest figures.

    Lenders vary on many things, income is one of those that can vary massively. The trick here would be combining the 2 to get what you want.

    It might be worth speaking to a broker maybe?
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • SystemSystem Forumite
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    ACG wrote: »
    Employed - It varies, most will ask how much you earn annually. You could probably find lenders who will go off the last 3 months payslips and other lenders who will go off your P60.

    Self employed - Again, it varies. Most will average out the last 2 years figures but there are lenders who will average 3 years or just use the latest figures.

    Lenders vary on many things, income is one of those that can vary massively. The trick here would be combining the 2 to get what you want.

    It might be worth speaking to a broker maybe?

    Thanks for your help...

    Employed:

    So I could possibly get away with working my socks off - putting in the hours at my employed job for the 3 months prior to applying for a mortgage and base my annual earnings off those 3 months. I may give that a go.

    Self Employed:

    If they average out the 2 years - then I may be short of getting the mortgage I need. Will likely need to find a lender who looks at the latest figures.

    Have spoken to a broker a few days ago - was way short of getting the mortgage I need. But I am saving hard and I will have my 2nd years accounts in 6 months time and this tax years earnings should be a good percentage higher than my 1st years accounts.

    I did email the broker these questions, but no reply. I'm assuming he hasn't bothered replying because I'm not making him any money.
  • edited 29 October 2015 at 10:28PM
    SystemSystem Forumite
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    edited 29 October 2015 at 10:28PM
    A few more questions:

    1. I read that a lender won't just credit check you, but will also run a credit check on your business address.

    What if your business address is your home address, which is a rented house-share ?


    2. What is the general acceptance of proof of self-employed income? Are SA302 forms generally accepted? or do you have to have certified accounts?

    Do lenders commonly also ask to see your actual accounts too?
  • ACGACG Forumite
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    1) They will credit check you at your address history. Residential only.

    2) SA302s and possibly tax overview documents. Sometimes an accountants certificate may be rquested.

    Find another broker. What you need/want is not straight forward and some brokers may not want the challenge.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • SystemSystem Forumite
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    ACG wrote: »

    2) SA302s and possibly tax overview documents.

    Thanks...

    What are 'tax overview documents' ?
  • ACGACG Forumite
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    Just a page confirming tax due and whether or not it has been paid.
    Your accountant should be able to get them for you.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
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