mortgage lender for self employed

forestboy1978

Hi there,

I'm basically self employed. Run a home and garden maintenance business which is doing very well.

I also have an evening job which pays quite well which I mainly use to plough money into my business.

Obviously I'm a busy chap. I roughly gross a little over 50K yearly.

I want to get a mortgage in the not distant future but I spend so much money on machinery and vehicles, or at least have done so and am considering another 25k purchase for a new truck next year.

Bottom line I hardly pay any tax which is great but I don't appear to be earning anything either as far as the bank is concerned.

It irks me as if I was employed and earnt 25k yearly and bought 50k merc on finance I'd still be earning 25k yearly and that merc wouldn't earn me a penny, unlike my machinery purchases.

Any way around this or do I have to wait?

Ta

amnblog

You cannot have it both ways FB.

You are either earning and paying tax or investing in the business and paying little tax.

A mortgage lender wants you to be earning not investing.

Thrugelmir

forestboy1978 wrote: »

It irks me as if I was employed and earnt 25k yearly and bought 50k merc on finance I'd still be earning 25k yearly and that merc wouldn't earn me a penny, unlike my machinery purchases.

The finance commitment would impact affordability calculations and therefore the amount that could be borrowed.

There's an old saying as far as a business is concerned. Turnover is vanity, profit is sanity however cash is king.

amnblog

Lender don't like vanity or kings. They are only interested in sanity.

forestboy1978

amnblog wrote: »

You cannot have it both ways FB.

You are either earning and paying tax or investing in the business and paying little tax.

A mortgage lender wants you to be earning not investing.

Really can't I? lol

As I suspected. I was hoping someone would know of a loop hole but alas...

Thank you very much for your advice.

amnblog

The Government are very keen on the tightening of mortgage options for the self employed.

Needing to declare income and pay tax on it to have it considered for mortgages helps shrink the 'grey market'.

Good news for the taxman.

forestboy1978

OK I have another question please.. ;-)

What about if I keep ploughing over the next 12-18 months and then cut expenditure hugely, pay off as much as possible apart from the new truck or reduce finance payments with a lump sum and then accumulate a year of accounts showing high income and minimal expenditure....

Is there such a thing a mortgage lender who wont average your taking over the 3 years? OR at least one who'll understand that my average is not at all an indicating factor of my gross profit both now and in the future years??

thanks once again

amnblog

Yes there is, currently some lenders will work on latest years figures only.

Use a broker for self employed lending.

forestboy1978

Thank you Amnblog you are a star :-)