Remortgage advice appreciated - 2 years self-employed (ltd. company)

mike2333

Hi Everyone,

I would really appreciate someone's advice around a remortgage application that I have begun but around which I foresee serious issues.

I started my own company just about 2 years ago. It's a limited company set up and I'm the only director and employee. The first year of trading was almost non-existent - due to my mum's having cancer, which thankfully she is now through successfully and is recovering. I took time out to be with her, and was not working for most of that first trading year. The second year of trading has been much better, but as I'm still at the early stage of this new way of working (always been a permanent job / PAYE etc. before), I need time to build up my client contacts and general services. At the same time, year 2 of trading has been reasonable.

My issue around the remortgage is this:

- Urgently need the money to fund a lease extension, as my lease is at a dangerously low level (under 70 years) and I have a reasonable idea of what the likely cost will be (purely because my neighbour did the same last year and we share the same freeholder, original lease and our flats are similar. She told me what was finally agreed in her case, and it is a great deal of money, which I simply don't have. Yet, cannot allow the years on the lease to decline for longer either.

- Tried to fund this via my existing mortgage provider last year (been with them 15 years, never missed a payment, have paid off a significant part of my existing mortgage with them already, there's around £95k on that left to pay and my property is valued somewhere north of £400k) ...but of course, I was turned down flat due to my employment circumstances. Searched around for an alternative lender, but at that stage - less than a year into trading and spending most of that not working but looking after my mum anyway - it won't be a surprise to hear that I had zero chance.

- Just passing the point of 2 years trading now. Second year has been much better (couldn't have been worse than year 1 to be honest), but it's still new to me and I'm still just finding my feet and beginning to get by.

- Not expecting much, I went online one evening to my mortgage lender's website and began the remortgage application via their website. To my astonishment, the next thing I knew, they were running a credit check on me and to my complete shock, they then gave me an offer in principle. However, it's not without some important caveats and strings. This is where I would really appreciate someone's help or advice.

- They require an accountant's certificate and indeed they are already in the process of directly contacting my accountant at the moment. I am 90% sure that my company accounts will not satisfy their criteria - due to having such a poor year 1 of trading and only a semi-reasonable year 2. Plus, I'm yet to even get my accounts filed for year 2, but that should happen in the next week or two.

Meanwhile, I am really under pressure around the lease extension. I won't bore you with the details, but just to say that it is crucial to get that process started asap. My mortgage company are aware of that being the reason - seem ok about it as well, but they have yet to fully appreciate my current financial situation in terms of company accounts. It doesn't seem even slightly relevant to them, as to whether I have a lot of equity built up already in the flat. They aren't much interested in that. They have now appointed both a solicitor as well as a surveyor and both are sending me all sorts of documents / arranging for an flat inspection etc. The things you'd expect, I understand ... it's just the details that the lender is going to get from my accountant very soon that will bring it crashing down.

I don't know whether to just pull out now before a rejection, or else to hang-on in until they run the numbers. Just feel it won't fly. Yet desperately need the funds as well.

Any advice you guys could give, would be really appreciated.

xyz123

You should really speak to broker. Some charge fees, some don't. It kya be quite tricky with your trading situation, but to be honest waiting one more year in lesse is hardly an urgent problem..goos luck. if situation doesn't allow, be prepared to he patient for another year. I am sure you will continue to work hard..

mike2333

Many thanks - very kind of you too!

The broker idea you mention is something I would like to explore and so I'll check some options. Part of the reason I feel unable to wait another year is that the lease extension cost is now rising at what seems an exponential rate. One year adds about another £3-4k at the moment ... on what is already a huge base. The freeholder is not one for sympathy or generosity of heart ... my neighbour found that out to her cost. She paid almost £!0k more than she had estimated and that took her a year of legal process and negotiation to reach. I'm dealing with the same individual...

The second reason is that my work is usually short-period projects - that can come and go. Some months, there will be nothing, others it can be busy. Would like to get the lease fixed, to remove the stress which it adds on top. Nothing like the thought of losing / prospect of having to sell your home out of necessity to play on your mind.

I'll go check on brokers now - thank-you again for the suggestion on that. Don't know much about what they do, so it might just be the perfect help I need.

Lilla_D

Who's your lender that you started the mortgage process with?

There are lenders who can take just the latest year trading figures, which means that dependent on the actual amounts, you could be ok.

In order to give you an agreement in principle, you must have stated income figures that satisfied their affordability criteria. Where did those figures come from? If the accountant can confirm those figures based on your trading results, then you should be ok. However, you might want to speak to your accountant to ensure that you are both on the same page and you know what the real figures are like, what your accountant will give to the lender and how these relate to the amounts you gave on your application. Once you clarified all this, there shouldn't be any surprise.

If you do get rejected, then just speak to a broker, who can then find you a suitable lender and arrange the mortgage. The new application will have to give an explanation for the previous rejection, but it's easy enough to explain that you went direct to an unsuitable lender. The new lender should be fine with it.