Self-employed mortgage application

spriggsy

So I'm self employed and looking to get a mortgage to move house. (I bought my current house whilst I was still in employment so this is a new experience)

At the moment, my last 2 years self employed income is currently averaging out at 31k, which is because the first year was only a part year, half in employment and half with the business full time. (It's also worth noting that the business has been running for 4 years so we have 4 year's worth of company accounts filed - it's just that for the first couple of years we ran the business part time)

After this financial year (which ends 30th April) my average income for the previous two years will bump up to 48k, which will obviously increase the amount we can borrow and will bring us closer to the amount we need for the type of house we want. We have just put our house up for sale, so we envisage the following timeline:

- House up for sale - early Feb
- Get DIP on mortgage for upcoming average income - late Feb
- 8 weeks to sell (as an optimistic guess) - early to mid April
- Put offer in on new house (either whilst ours is still waiting to sell or when it is sold - depends how accommodating the sellers are)
- End of financial year - end of April
- File accounts - early May
- Full mortgage application - mid May
- Complete

My question is, would I be able to get a DIP based on the anticipated income (which I can calculate to the penny anyway), and then do a full mortgage application once the accounts have been filed (which would be early May)? Or is it a risky strategy and should I just get a DIP once the accounts are filed? I don't want to get a DIP, wait, then apply and find the application gets rejected and we have to pull out. On the flip side, it may take 4 months to sell our house, in which case there won't be an issue as we will have filed the accounts by then.

Thanks in advance.

kingstreet

There's a handful of lenders who work on latest year's figures, rather than an average if the trend is upwards.

Why don't you speak to a broker now and get an idea of what you can do now, rather than waiting until later?

spriggsy

kingstreet wrote: »

There's a handful of lenders who work on latest year's figures, rather than an average if the trend is upwards.

Why don't you speak to a broker now and get an idea of what you can do now, rather than waiting until later?

I'm in the process of speaking with a broker, I just like to obtain as much advice and information as possible.

We looked at Santander who go on 1 year's figures but we were rejected. We met all credit and affordability criteria but they rejected us based on their 'debt to income ratio' score.