How do mortgage lenders calculate self’s employed income?

C.w_Wilson

Me and my partner are looking to buy our first home in the next year. I’m in full time employment earning £21000 a year, and my partner is self employed. I was wondering how they calculate a self employed income? As in last year she earned roughly £16k, and is expected to earn roughly £18k this year, will they take an average of both years or will they use the most recent figure? Any help would be greatly appreciated as we are trying to work out how much we will be able to borrow. We were hoping to get £130k with a £10k deposit... is this unrealistic?
Thanks again.

sal_III

It's the average of the last 2 years of accounts if the figure goes up, so in your case £17k.

Which makes borrowing £120k at 92% LTV next to impossible

kingstreet

Lenders take net profit, which is gross income less expenses/allowances but before tax and NI.

Although many lenders take an average when the latest year's income is higher, there are a handful who work from the latest year's so will potentially lend more.

Independent broker help would be useful with this.