Self-Employed Mortgages

amnblog

They are not unique

Thrugelmir

diz79 wrote: »

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

Turnover is vanity, profit is sanity, but cash is always king.

Never in reality been any different.

diz79

ok so the total they could have is 90,000 -15x4 plus 30,000 deposit. WOuld it not be possible to do shared ownership or help to buy?

Also if a parent is involved how much stamp duty would it be woud there income not be considered also? As they are still taking a risk.

amnblog

Your friend needs to engage a mortgage broker.

diz79

Can anyone else help ? If a parent is involved how much stap duty would they pay %? Would their inome be considered?

Is shared ownership worth it or help to buy?

Thanks again

csgohan4

diz79 wrote: »

Can anyone else help ? If a parent is involved how much stap duty would they pay %? Would their inome be considered?

Is shared ownership worth it or help to buy?

Thanks again

Your friend can borrow very little and the fact your friend is considering parents on the mortgage means they are not thinking it properly.


Money and family shouldn't mix, parents would pay stamp duty and the term of the mortgage may be limited depending on age and income sources.


If you friend fails to pay the mortgage, the lender could come after your parents and their own home.


https://www.gov.uk/stamp-duty-land-tax/overview


above is link on stamp duty, get your friend to read it

diz79

Ok but surely shared ownership is worth considering? Look at this surely this is dooable?

http://www.rightmove.co.uk/new-homes-for-sale/property-63382685.html

http://www.rightmove.co.uk/new-homes-for-sale/property-63382316.html

Or is it more if you dont have a deposit?

Thanks

csgohan4

Have they looked into the pitfalls into Shared ownership? the escalation to 100% process, the maintenance costs e.t.c?

There is always more than just 'cheaper than rent'

https://www.cml.org.uk/news/news-and-views/626/

Verix

Yes, your friend could look at help to buy or shared ownership potentially. To avoid the guesswork, get your friend to request his last 2-3 years SA302's from HMRC or if he has a limited company get his accountant to send him the last 2-3 years accounts. Once he's got those, approach a broker who can look at potential options. I think this one would be a struggle without professional help.

dharper81

If you friend purchases with parents (or uses them as a guarantor on the mortgage), then there is an additional stamp duty of 3% to pay. The mortgage term length would be restricted based on the age of the parents (e.g. if parents are 60 with no obvious pension income then most lenders will only offer a 7 year mortgage term (up to state retirement age). If parents have a demonstrable retirement income, then they could potentially borrow up till the age of 80-85 with some lenders.

For the perspective of a mortgage underwriter your friend has a gross annual income of £15,000 - equivalent to £13,500 net income (after tax & NI). If they wanted to purchase the 1 bed shared ownership flat for example (£100k for 35%), they might be able to at a stretch (some lenders will lend 5x income, so £75k + £25k deposit).
However, your friend will need to prove that they can afford both the mortgage repayments (even if interest rates went up e.g. to 6%) AND the rental part of the shared ownership (£550/month - £6600 a year). They would be unlikely to pass the lenders affordability tests, because a £75k mortgage over 30 years at 6% will cost £450, the rental component is £550, the service charge for the building approx £150. This comes to £13,800 a year - more than your friends net income, before taking into consideration other affordability test requirements e.g. food, utilities, travel & council tax.

Also, don't forget the other fees that need to be paid when purchasing e.g. mortgage arrangement fee (£0to £1500), solicitors fees (£1200), homebuyers report (£500), stamp duty £variable) + money for furnishings etc.