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self employed and mortgage
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chrislee2810
Posts: 117 Forumite
I am having problems getting my head round a few issues with my wife being self employed. This a overview of her accounts:
WORK DONE £82852
LESS EXPENSES
Sub contractors £35335
Admin wages £1236
Motor running and travelling expenses (Business proportion)£1428
Printing, postage and stationery £712
Telephone (Business proportion) £641
Advertising £555
Accountancy £647
Repairs £50
Redecoration and refit of classrooms £2652
Rent of premises £3800
Light and Heat £183
Website £1372
Sundry £125
Car interest £290
Bank charges £146
Subscriptions £60
Total £49232
NET INCOME £33620
All of the above bills are paid from our joint current account and makes our account look like there is a lot going out. Now we have the telephone, internet, light and heating and her car all come out of the account but they are being deducted from her earnings. My question is that would these bills need to be taken into consideration when looking at affordability as they have already been accounted for, and we just use her net income?
WORK DONE £82852
LESS EXPENSES
Sub contractors £35335
Admin wages £1236
Motor running and travelling expenses (Business proportion)£1428
Printing, postage and stationery £712
Telephone (Business proportion) £641
Advertising £555
Accountancy £647
Repairs £50
Redecoration and refit of classrooms £2652
Rent of premises £3800
Light and Heat £183
Website £1372
Sundry £125
Car interest £290
Bank charges £146
Subscriptions £60
Total £49232
NET INCOME £33620
All of the above bills are paid from our joint current account and makes our account look like there is a lot going out. Now we have the telephone, internet, light and heating and her car all come out of the account but they are being deducted from her earnings. My question is that would these bills need to be taken into consideration when looking at affordability as they have already been accounted for, and we just use her net income?
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Comments
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The income net of expenses is the key one.
A lender would not expect domestic bills to paid out of the business so will allow for those separately when calculating affordability.
You may be able to offset a portion of your bills as business expenses in the accounts but the lender will not factor that in.I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, 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.0 -
chrislee2810 wrote: »All of the above bills are paid from our joint current account and makes our account look like there is a lot going out.
Suggest she opens a business account. Will keep the bank happy and make dealing with the HMRC easier (should the need arise).0 -
Our mortgage broker was saying that for instance the electric bill from my wife's business would have to be taken into consideration when calculating our affordability, but I do not think that this should be the case as it has already been deducted from her earnings.0
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Technically you may able to get a mortgage underwriter to factor costs out of the home that are declared and paid through the business.
For example we have had car loans in personal names ignored where we have evidenced the business is paying the finance.
However, I cannot see this happening with expensive figures of £15 a month.I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, 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.0 -
All of the above costs are billed to my wife's work premises under the name of her company, by factoring the costs in they really hit our affordability.0
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