First time buyers - self employed - Help?

Emmazom

Hello, I was hoping for a bit of advice.

Myself and my partner are first time buyers and are both self employed.

We visited a mortgage broker recently for a prelimiery meeting and he stated that our best chances would be to go for a mortgage with Halifax as they are willing to accept 1 years tax records as long as everything else is up to scratch.

My partner has 4 years worth of accounts, with the 14/15 year being £24,500 profit, it has increased each year from £11,000 and 15/16 is likely to be around £25,000.

The problem however is with myself, I was in full time employment until November 2014 where I became self employed. During employment I earnt almost £6000, I submitted my tax return for November 14 to April 15 and made £2800 profit. This current tax year if it continues as it should would be around £15,000 profit.

From what I understand from the broker, with last years partial employment/self employment, the bank won't recognise my pay from employment and will only acknowledge the £2800, is this correct?

He said our best option is to wait until April and submit my next tax return immediately and then apply with my partners 3 years tax records and my 1, for the £15,000

Issue is, we've fallen in love with a house, we would like to put an offer in for £153,000 and have the at least a 10% deposit, potentially more. What are the chances of any bank considering us, the broker stated come april we could easily get the mortgage.

We have no dependants, no debts, our credit cards are clear and my experian credit report gave me a 100% score.

The mortgage that we would be paying is not much more than our rent and I have never made a late payment in my life, so it's just frustrating to think we may miss out on this house that we love just for the sake of 2 months.

If anyone has been in a similar situation or has any advice it would be greatly appreciated.

MortgageMamma

What are you and your partners occupations? How much is your deposit? What is your partners credit file like? To be honest I think your broker is most likely right in this instance, a couple more months and you could go with a mainstream lender get a good deal etc. I think where you may struggle could be affordability, what is the loan to value?- are you both sole traders or limited companies?

Emmazom

Hi, my partner is a tattooist with a very regular diary and I am a body piercer/laser technician. We are both sole traders. He has 4 years worth of accounts, 5 in April. I have a partial one from 14/15 and will be putting through a full year in April

We have a decent amount of savings but ideally only want to put down the 10% to start with and overpay when we feel is best.

My partners credit file isn't the best, he has 2 defaults that drop off the end of this year, but they are mobile phone bills and the broker has looked into lenders that won't pay much attention to this. We did both pass the credit check for the MIP.

Affordability tbh I don't think will be an issue, we were told between £600 and £700 a month. We currently pay £465 in rent, my partner currently pays all the bills but when we move I will be paying half the mortgage.

As I mentioned we have around £35,000 in savings so enough to redecorate and have a decent chunk left just incase. We have no outstanding debts, our credit card is clear, and no monthly bills except utilities, mobile phones and netflix. Cars were paid in cash and insurance was paid in one lump sum.

amnblog

Love will have to wait if you wish to include your income. The broker is correct, you have to earn it before it can be considered.

Emmazom

I'm aware that I need to have earned the money to be able to declare it, it's just frustrating that they won't take my paid employment into account. Or the fact that I've already earned £12,000 this tax year. If I was employed typically then 3 months pay slips would be enough.

I was just hoping that someone else in a similar situation may have found a way around it. Although I love working for myself it sure is a nightmare when it comes to things like this.

kingstreet

A lender can't take into account income from a job where you are no longer employed.

Once wholly self-employed, you can only use the earnings from your self-employment.

Typically, when you have two years figures, lenders will take an average of the two years as long as the profits are increasing.

Emmazom

I understand, still frustrating however. I think our best option then is to either not put any offers in until April or if we do find something we don't want to miss then we have the option of getting a mortgage with my father and then remortgaging later down the line.

Thanks Everyone

amnblog

You are not ready to buy. That is the way it is.

Emmazom

Advice on what to do to get me ready to buy would be more helpful than a blunt statement. I posted here for advice, I'm not a mortgage broker or a bank and a first time buyer so please forgive me for not knowing wether we would pass the banks checks or not.

AnotherJoe

You could approach the sellers of your dream house and ask them what they would think of two month delay. It might be an issue with them, they might be positive if they haven't found anywhere to move to yet.

Emmazom

I was considering that but I wasn't sure if it was completely barmy to think they'd consider it. They haven't found a home yet but do have somewhere to go if they sell and have only had one offer since December.

We're going for a viewing Thursday so I think we'll explain the situation to them then. Thanks