Help to get around affordability assessment - self employed and low "nett" income

Bluebirdman_of_Alcathays

Presumably these expenses that are offset would still need to be offset in the new house? You are not suddenly going to perform your Childcare business elsewhere? Why would the mortgage lender not take them into account, it is money that you are obliged to pay others, and not them, every month, so makes you less attractive as a borrower.

copperclock

hanabana wrote: »

with my husbands wage we aren't entitled to child and working tax credits.

Are you entitled to Child Benefits?

Is your husband's income being taken into account for the potential mortgage?

Guest101

hanabana wrote: »

the renting situation is a very complicated one that we are finally at the end of. the letting agents changed terms of the contract for both parties - impossible. and rent was increased - you must deal with contracts on regular basis, surely you know that one party cant just change the contract, new contracts were arranged which we were charged for as we had been given a section 21 notice - well did the LL want to evict you? if not safely ignore it. but arranged with the landlord that they would retract that and give us a maximum of 12 months at increased rent before taking off the market completely, so yes we do have to move.

i also know renting another property is an option but would like some security which is why i would like to buy. - you've had 10 years of security, why wouldn't next time be different?

i am self employed as a registered childminder. i have a childminding accountant and because i work from home and work 60+ hours per week percentages of household bills etc are ofset including wear and tear. - indeed. But those are then repayable. IE you offset some bills, but those bills are increased du to the work. i would have to pay the rent and council tax etc regardless of what job i was doing so this is more of a perk really.
credit cards are old debt that with this forum have been moved between credit cards. i continue to save rather than pay off as they aren't acruing interest currently and saving goes towards the deposit - but you'll need to pay them off as lenders will calculate that as debt.

with my husbands wage we aren't entitled to child and working tax credits. - child benefit?

i don't know what we can do to rectify looking as though we run our household at a loose when i know we aren't which is why i asked for help!

Work FT for an employer?

csgohan4

Is buying a house a right? You have security relatively in renting as well, not to mention no need to pay maintenance costs and broken boilers e.t.c

Being able to buy and would like to buy are different I'm afraid and with that low income, your not going to get much for your salary, especially as your self employed

hanabana

yes we get child benefit but nothing else and husbands wage is being taken into account for mortgage, i asked about me not being included on assessment as the debt is mine and the low income is mine but basically because we are married we are all dependant on him!

Tammykitty

hanabana wrote: »

the renting situation is a very complicated one that we are finally at the end of. the letting agents changed terms of the contract for both parties and rent was increased, new contracts were arranged which we were charged for as we had been given a section 21 notice but arranged with the landlord that they would retract that and give us a maximum of 12 months at increased rent before taking off the market completely, so yes we do have to move.

i also know renting another property is an option but would like some security which is why i would like to buy.

i am self employed as a registered childminder. i have a childminding accountant and because i work from home and work 60+ hours per week percentages of household bills etc are ofset including wear and tear. i would have to pay the rent and council tax etc regardless of what job i was doing so this is more of a perk really.
credit cards are old debt that with this forum have been moved between credit cards. i continue to save rather than pay off as they aren't acruing interest currently and saving goes towards the deposit

with my husbands wage we aren't entitled to child and working tax credits.

i don't know what we can do to rectify looking as though we run our household at a loose when i know we aren't which is why i asked for help!

Right - so this is like the mileage situation I explained earlier


Your accounts will look something like this (Monthly)
Income - £2,000
Household Expenses - £700
Other Expenses - £300 (Professional fees, insurance etc)


Net Taxable income - £1000


Affordability Calculations should then look something like this


Household Income - £1000




Rent - £1000
Other Bills - £700
Add Back Bills covered by Business - (£700)
Total Household Expenses £1,000


Or alternatively get proportion of household expenses covered by the business recorded in Income as expenses


The affordability issue seems to be caused by a double counting of the household expenses
You are including a proportion of the household expenses in your business expenses, thereby reducing your income
And you are including the full cost of your household bills in the property running costs for affordability, thereby increasing your bills.

maisie_cat

Tammykitty is right, some of the the current expenses are being double counted. My sister is a childminder and I know that a large proportion or housing expenses are allowable.
You should ensure that the mortgage broker is acting on the right numbers. If necessary put together a side by side set of numbers, house hold in one column and childminding in the other, with totals. The expenses that are offset will be a positive in one column and negative in the other. It will demonstrate the net effect.
Frankly I'm amazed if a mortgage broker doesn't have to deal with things like this, it's the sort of thing you pay for!

sheff6107

Let's not beat about the bush. The only figure your mortgage provider pays any attention to is your profit. The only way to get a higher figure on your SA302 is to earn more money or declare less expenses.

Most self employed in this day and age will therefore now declare less expenses, hand the tax man a few grand in tax they don't legally have to pay but get a mortgage out of it.

You can talk about legality and morality but you'll be doing whilst still living in your rented house or until you become employed.

You should ensure that the mortgage broker is acting on the right numbers. If necessary put together a side by side set of numbers, house hold in one column and childminding in the other, with totals. The expenses that are offset will be a positive in one column and negative in the other. It will demonstrate the net effect.
Frankly I'm amazed if a mortgage broker doesn't have to deal with things like this, it's the sort of thing you pay for!

Probably because a mortgage broker has to tread very carefully. He might well be trying to get across the facts I stated above but with a lot of nudging and winking.

ClareHopping

I'm self employed and came up against the same barriers. Although I applied for a self-employed mortgage a while ago, it was easier than I thought it would be to get approved for one and now we've moved up the ladder with a much bigger equity and smaller mortgage.

Although it wasn't around when I was looking for a mortgage, it might be worth trying out a resource like Online Mortgage Advisor to help match you up with a specialised self-employed mortgage broker who can increase your chances of getting approved.

Good luck!

theartfullodger

hanabana wrote: »

..........I am self employed and have been for 8 years, my accounts are all done correctly and i have an accountant but for my industry there are a lot of ofset expenses meaning that although i get paid in excess of £2K every month my tax return is for less than 50% of this. .........

Well, you can't have it both ways: Either you pay way, way, less tax than the rest of us (perfectly legal, no criticism) or you complete self-assessment with more, shall we say, "realistic" data.

I know of one person who chose to complete tax return with almost no expenses, so declared income high, so got mortgage he wanted, but paid much more tax & needed to keep paying more the following year until next SA return done. But any sensible lender might make enquiries...