Self-Employed Mortgages

diz79

Hi Guys been talking with a friend about getting a mortgage and wondered if you could help, they are not very computer literete.

Person has last two years of income.

Last year 20,000 down to 13,000 after expenses

This year ending March 16 30,000 down to 17,000 after expenses. I understand it probably goes on the net income.

Income is from regular clients throughout the year and not just one offs.

Current year income is up a lot again which could be shown on bank statements,

Deposit £25,000 - £30,000

Im guessing the chances are low but can anyone help at all

Many thanks

ACG

Lenders will use the figures after expenses but before tax.

So assuming that is what those figures you give are then lenders would usually look to use:
£13,000 + £17,000 / 2 (years) = £15,000.
Generally speaking you can lend around 4 to 4.5x your income meaning you could get a mortgage for around £60,000 to £67,500 with your deposit on top.

diz79

ACG wrote: »

Lenders will use the figures after expenses but before tax.

So assuming that is what those figures you give are then lenders would usually look to use:
£13,000 + £17,000 / 2 (years) = £15,000.
Generally speaking you can lend around 4 to 4.5x your income meaning you could get a mortgage for around £60,000 to £67,500 with your deposit on top.

With the £17000 there will be tax on top of that payable Jan 31 2017 £2400ish. But I think is it right you pay more tax intitialy?

diz79

Also do they not even look at current earnings and bank account?

Mr_Gas

Ive always been Self Employed. It seems to me that Mortgage companies are now only interested in the figures on the form SA302. And always need the last 3 years of accounts.

amnblog

Mr_Gas wrote: »

Ive always been Self Employed. It seems to me that Mortgage companies are now only interested in the figures on the form SA302.

Unless you are a Ltd Co Owner

And always need the last 3 years of accounts.

Some one year, some two years, depends on the Lender.

ACG

If you turnover £50k but your expenses are £20k that gives you £30k, you would then pay take on the £30k (although some of that £30k is 0% tax).

Your income would be the £30k in the same way that someone who is employed earns £30k and still has to pay tax...albeit theirs is charged at source rather than in arrears.

Some lenders as amn says use the latest years figures only, others 2 years and others 3 years. In the main I think most lenders look to use the latest 2 years.

csgohan4

You friend needs a good broker who is experienced with self employed.


What kind of house price are they thinking of?

diz79

Thanks everyone looks unlikely then but maybe not impossible, house prices between 160,000 -230,000. could you possibly have a parent as a guarantor? Or even put them on the mortgage with you so you then have two income plus the fact they already own a property?

Does anyone have any idea how brexit may affect the housing market?

csgohan4

putting parents down on the mortgage means they will pay Stamp duty as they own a house already, plus has implications as the mortgage term will be a lot shorter as they will retire earlier.


Brexit or not, your friend cannot afford that price range at this time.


You cannot generally borrow more than x4.5 your income and any debt will reduce this further.

amnblog

diz79 wrote: »

Does anyone have any idea how brexit may affect the housing market?

Here is a list of people who have no idea.

Theresa May MP
Philip Hammond MP
Amber Rudd MP 2
Boris Johnson MP
Sir Michael Fallon KCB MP
Elizabeth Truss MP
Justine Greening MP
David Davis MP
Liam Fox MP
Greg Clark MP
Jeremy Hunt MP
Damian Green MP
The Baroness Evans of Bowes Park PC
Chris Grayling MP
Sajid Javid MP
David Lidington CBE MP
David Mundell MP
Alun Cairns MP
James Brokenshire MP
Andrea Leadsom MP
Priti Patel MP
Karen Bradley MP