Self-employed, cash in hand, and wanting a mortgage!

AmandaEss

Hi everyone,
I am self-employed and work two jobs - one where I get paid via bank transfer, and the other where I get paid cash-in-hand. The two jobs pay me roughly the same. I have had the bank transferring job for 5 years, and the other only since last April (2016). Before that, the bank transferring job was paying me quite a lot more, so my earnings have gone up since last April, but not by an amazing amount (about £4000 a year). Therefore, I have not yet completed a tax return so have not yet paid tax on half my earnings. Most of it has not gone into the bank, but I have kept a record of how much I have been paid.
I want to buy a house, and all the online calculators say I should be able to borrow to be able to afford a house up to £130,000. I have a £20,000 deposit.
I am also a part-time student, and will be until September 2018, which is costing me £3000 a year. But this will only be for one more payment's worth, and I'm concerned this will also affect how much I can borrow.
My question is, does it matter that I have not yet officially declared half my income, as the tax return has not yet been filed? I have an accountant - will it be enough that I inform them and they can then confirm with the mortgage brokers? I just don't know how it works and can't find any good advice online!
I am also going to make an appointment with an IFA.
Thanks in advance for your advice!
Amanda

anselld

It doesn't matter how you receive the income, cash or bank, it should be declared on the tax return. Likewise it does not matter if you bank the cash or stuff it in a mattress, it is still income.

ACG

Some lenders will work off accounts, other SA302s.
As we are not after April, it would benefit you massively if you get your SA302s, most lenders need 2 years worth but some lenders will work off one years.

You will likely need to file them so you may as well get it done sooner rather than later.

In terms of your payment, some lenders will ignore it, others will not. So let your broker do the work on that.

AmandaEss

Of course it will be. If you read the post, I said it hasn't been declared YET because I haven't submitted April 15-April 16 tax return yet.😊

anselld

AmandaEss wrote: »

Of course it will be. If you read the post, I said it hasn't been declared YET because I haven't submitted April 15-April 16 tax return yet.😊

Hopefully you mean 16-17.

AmandaEss

Yes. :rotfl:
So it would be worth submitting my tax return now, then I have something official that I am earning?

ACG

Yes. If you do not have the SA302/Tax overviews then no mainstream lender is going to take that income into account.

PasturesNew

You have many barriers that might be put in your way. There are individual aspects of your life that wouldn't sit well with many lenders - and you've not just one that sends up a 'flag', but several.

One major one is that the majority of lenders will like to see 3 years' accounts. So your starting point would be to find lenders who lend on fewer years.

That then raises questions of the risk you present. Why are you working like this, will it change, will will you be doing, what did you do before all of this ... in short: what are your prospects?

I'd suggest, too, that a £20k deposit against the risks you present might not be enough - and even lenders prepared to lend against fewer accounts books would wish to see a larger deposit.

It might be that having investigated your options you realise that the best thing to do would be to save hard for 2-3 more years and then try, in order for you to save a bigger deposit, for lenders to require a smaller deposit, for more lenders to lend to "people in your position".

You might just find you're paying over the odds for "a house you dislike, but it's the only thing I could buy today", because you were set on buying one now .... and not accepting that sometimes things conspire against you.

I hope you find what suits you - but do not be surprised/disappointed if you fall foul of so many clauses/limits and restrictions that you think the world's against you. It's not against you, it's trying to limit disastrous decisions.

Thrugelmir

AmandaEss wrote: »

Hi everyone,
I am self-employed and work two jobs - one where I get paid via bank transfer, and the other where I get paid cash-in-hand. /QUOTE]

Hope the jobs are genuinely self employed. As you may be raising issues for your "employers".

AmandaEss

Thank you, that's helpful advice. I'm going to try and do my tax return in the next couple of weeks, so at least they'll have that. The income is fairly stable. I work from home, with young children, whose parents pay me in cash. They only come for 1-2 hours at a time so I guess most of them think it's easier to pay in cash. There are always more children requiring my service and I've not had less than 8 for over a year (current number is 11 a week). A couple of them pay me by bank transfer.
My other job is a dentist (yes, career change!) and I have 5 years of accounts with that. I wanted to get a mortgage 3 years ago, and found out that Scottish Widows were the only ones that lend to dentists with less than 3 years of accounts. So I'm wondering if I'll be in a similar position now.

AmandaEss

Both are legitimate. All dentists are self-employed unless they are hospital or community dentists. The other job, I have an Ofsted-registered business and am working from home. Parents pay me in cash.