Mortgages for the self employed

ahouse

Thrugelmir wrote: »

What's the nature of your friends self employment?

The friend and my partner are both musicians, they teach 1 to 1 lessons and perform.

Phirefly

Myself and my husband are SE and I'm currently on extended maternity leave. Just chipping in to agree with those who said the 25% figure is nonsense. Perhaps that was their lender's criteria but as others have said, there's no hard and fast rule across lenders.

A fellow company director friend recommended a local mortgage broker to us and she was excellent. Given long enough, we could probably have saved ourselves the £499 in fees and eventually found the product ourselves as even though our circumstances and income streams are somewhat unique and unconventional, we were pleasantly surprised at the sheer number of lenders we were able to select from. But for us, speed was of the essence. The broker was able to refine the initial list of lenders purely through her experience and knowledge. When several lenders appeared to offer comparable rates, she was able to recommend the one which would most likely approve us, so we wouldn't waste time. Using the broker saved us a great deal of time, effort and uncertainty.

Don't be afraid to use a broker who charges a fee. Different brokers have different specialisms and we thought in the sceme of things, the long term saving we would make from finding the best possible product would far outweigh her fee. It's easy to square it when you are self employed as it pulls into sharp focus what your own time is worth and when it makes sense to pay a professional to save you tat time.

glasgowdan

Our mortgage was based on my wife's salary and an average of my last 3years net profit as sole trader self employed.

Mortgage_Moog

"The value of a mortgage broker is they can help you apply to a lender that is actually going to lend to you based on your particular criteria"

I wouldn't put too much into that but of course it depends on the broker. I am self employed and went to a broker who said they had specialist knowledge and could put me in touch with special companies that wouldn't mind me being self employed.

I spent months of saving the deposit and being told to wait, wait, wait for my appointment with the broker where they would reveal these magical companies that could help me. The day came, I went into the office and he said....try Nationwide. I did and they offered me 22k.

I went away, applied directly to a high street bank and got offered an amount I could actually buy somewhere with. I did it all myself in the end. I based the bank I went to on the fact that they'd given me credit cards in the past with high limits. Quite a basic strategy I know but it worked and I got a great deal, far better and cheaper than anything the broker had offered me.

neo2020

Mortgage_Moog wrote: »

"The value of a mortgage broker is they can help you apply to a lender that is actually going to lend to you based on your particular criteria"

I wouldn't put too much into that but of course it depends on the broker. I am self employed and went to a broker who said they had specialist knowledge and could put me in touch with special companies that wouldn't mind me being self employed.

I spent months of saving the deposit and being told to wait, wait, wait for my appointment with the broker where they would reveal these magical companies that could help me. The day came, I went into the office and he said....try Nationwide. I did and they offered me 22k.

I went away, applied directly to a high street bank and got offered an amount I could actually buy somewhere with. I did it all myself in the end. I based the bank I went to on the fact that they'd given me credit cards in the past with high limits. Quite a basic strategy I know but it worked and I got a great deal, far better and cheaper than anything the broker had offered me.

I have absolutely no doubt that there are crap mortgage brokers out there. In fact, the first one I contacted didn't seem interested, had me spend an hour filling out his affordability sheet and then never got back to me.

Without knowing the exact details of your situation, there could have been many reasons why you had no trouble doing things yourself:
- your situation is straightforward and any lender would have been happy to lend to you
- you got lucky and picked a lender that matched up with your criteria

I contacted 3-4 lenders myself before going to the broker, all of which were unwilling to lend the amount we needed. In the end we applied to Santander via the broker, which was not one of the banks I had originally contacted, because the broker specifically knew that they would lend the amount we needed taking into account the details of our particular case.

If you are in full-time employment, have great credit, a large deposit and way more income than you need for the amount you're borrowing, you probably don't need a broker.

If your situation is a bit more complicated, you might need a good broker.

Thrugelmir

ahouse wrote: »

The friend and my partner are both musicians, they teach 1 to 1 lessons and perform.

May explain the lenders reluctance to lend in this particular instance. Once the business had been reviewed in detail.

ahouse

Thanks so much everyone for your advice! Although we are a few years off reaching the planned deposit (assuming that will actually be enough in a few years time!) its good to know the options available. As with many things it seems like we will have to explore every avenue, using a mortgage broker sounds like a good idea without ruling out doing it ourselves either. And it is certainly reassuring to know that the 25% salary is not some secret universal rule for the SE we had missed!

sheff6107

Just avoid Nationwide if you are self employed.