Computer Says No!

Paulg48

Looking for some advice please. We are looking to remortgage our home to get off a variable rate onto a fixed rate and to consolidate a few unsecured debts. Total LTV likely to be about 70%. This will be a joint application. We both work full time and this income will form the basis of our application. My wife also runs a beauty business on a part-time basis more as a hobby business really and this is not her primary source of income. To support this, we have set aside one room in our house which she uses as a Studio. The room represents less than 10% of the square footage of our home and can be reverted to normal domestic use in about an hour. We do pay small business rates on this room.

We are having some difficulty passing the automated application processes so many lenders apply, as we are unable to apply context or explain our situation. Are there advisors or lenders out there that will consider this situation. It seems mad that we are seemingly unable to get a normal residential mortgage and the scale of the business does not even qualify for a semi commercial or commercial mortgage. We have fallen into a crack in the system.

Any advise or help appreciated.

Thanks

ACG

I might be missing something, but I think you are overthinking it.

There will be a question something like:

Will the applicant(s) or their
immediate family occupy 40%
(or more) of the property?

or

Will any part of the property be used for purposes other than your own residence?

followed by:

If YES, will your residential use exceed 40%?

In either instance you would be using more than 40% as residential so it should not be an issue should it?

If you answer the question as asked (not how you think it is being asked) then it should sail through I would have thought.

Thrugelmir

Do you need the part time income to meet the affordability criteria of lenders?

Paulg48

Thrugelmir wrote: »

Do you need the part time income to meet the affordability criteria of lenders?

No, the income from this business will be irrelevant in terms of the mortgage application.

I am told that many lenders will not consider residential mortgages if a home business is being operated, even if it is nit even relevant to the application in terms of affordability assessment. We use way more than 40% of our property for residential use.

ACG

I dont understand why there is a problem if you use more than 40% for residential.

Dont take this personally, its quite common but did you go in to war and peace about the business and then the advisor has just erred on the side of caution and basically answered the question incorrectly?

GMS

Lenders would not be keen on people visiting the premises. If you operated administration work from your home then no issue. Because you have members of the public visiting then there will be potential issues.

Paulg48

GMS wrote: »

Lenders would not be keen on people visiting the premises. If you operated administration work from your home then no issue. Because you have members of the public visiting then there will be potential issues.

My wife carries Public Liability Insurance. I am not clear as to why this is any kind of issue from a Lender's perspective. The fact is that the property is our main home and for 90% of the property it is that. 1 Room is taken up for the part-time Beauty Salon and no change of use permissions apply as nothing has been altered within the room, apart form different types of furniture, non of which is permanent.

This is not a full-time business and people are not entering the property like they would a shop or a commercial Beauty Salon type premises on the high street.

It cannot be right that in our circumstances we are "unmortgageable", if such a word exists. There is nothing that I can see in the MMR that specifically discriminates or restricts people in our position from successfully applying for a mortgage, especially as the financial basis for the application has nothing to do with the side line that my WIfe operates.

In the good old days you would be able to have a reasonable conversation with a person in charge who would be able to consider things in perspective and apply discretion in arriving at a decision. However, these days it seems if you cannot tick the correct boxes on a computer you are doomed. Hence the thread title.

Paul

MM64

Hi,

You say the income is not part of the mortgage application so why not simply close the business for the duration of the application process.

A remortgage should be concluded fairly quickly and you will get past the computer.

Re- start the business after the funds arrive.

You won't have lied on the application so I can't see any future problems.

Good luck.