Struggling to reach required (Wanted) mortgage

bigstevex

We're trying to get a mortgage of £410000, we have a deposit of £110000 (20K is gifted the rest is equity in house we've sold) so about 79% LTV.


Income is £47.5k & £20.4k, we also have dividend income of ~£10K each from last 2 years and £5K each from 3 years ago from a ltd company we both own 50% each. My salary (47.5k will have to be proven by a letter from employer as lazy HR have only just adjusted it for recent promotion, hence no payslips with rate on for at least another 3 weeks).


Only constant outgoing is £290 per month childcare split £145 each for our 1 year old, £16 mobile phone, £2.5k on a credit card which will be cleared prior to completion.



Leeds, we're stuck at 399k, natwest 387k. We tried HSBC as they looked hopeful but reading their requirements they want 3 months business bank statements to show trading for limited company but we only trade Aug-Dec, hence they aren't worth trying if this is correct.



Also trying to get a 5 year fix at around 2.04% that seems available in several places.



Any advice, or brokers who can get us higher within the above criteria? Tried london and country's website, they say ~£422k but one of the ones in the list was Natwest which I found odd as Natwest direct have said only 387k on an AIP, what's with the disparity there? Don't want to run the risk of failing further along the application process.

jennhg88

Work directly with an independent reputable broker, don!!!8217;t rely on online calculators.

amnblog

Seems a tad too far. You are asking a lot here.

Can you not simply get the price down to make it fit.

Thrugelmir

bigstevex wrote: »

We tried HSBC as they looked hopeful but reading their requirements they want 3 months business bank statements to show trading for limited company but we only trade Aug-Dec, hence they aren't worth trying if this is correct.

No forward orders for the forthcoming trading season? August is less than a month away.

getmore4less

Pushing the limits with £87.5k for £410k

if the deposit is coming from equity and gift how come no saving from the income over the last 2/3 years?

What happened to the £50k from the business

Any way to extract this years income from the business in advance to create another £20k for the deposit?

That would get you to 4.5 multiple.

bigstevex

Morning, thanks for the replies.


The 50K... Went back into the business or to make overpayments to existing mortgage, we bought last in 2007 so been trying to get mortgage right down while interest was low, hence the equity and minimal savings. Also Wife has only been back in work for the last 4 months due to Mat leave, hence barely any saving in last 12 months. We do have ~£15k in savings but that's to cover most of the stamp duty and fees.


Business has £150K of stock in it too, again that's where a lot of our savings went. As for orders, it's an amazon/ebay business hence we can't make future orders etc, I'll have the missing ~10K by the end of August no problem, however we sold our house 4 weeks ago and don't want to annoy our buyers by stringing the process along.


Can't get the price down at all, tried 2 offers already however as the house isn't even on the market so they want the asking or near enough, which I can understand tbh. (It was pulled temporarily after it sold for near asking price but then the sale fell through, long story).


Stressing me out

bigstevex

Would I be pushing my luck if I used the money we've saved for stamp duty etc for the 'deposit', we'd have enough then, and just make sure that we don't exchange before we have the missing stamp duty/fees at end of August?
110+399+15 gives us enough...


I sense it's a bad idea

getmore4less

taking dividends then lending that money back into the business

Get the business to borrow the money and pay back your loans increasing your deposit.


Does the business really have to carry that much in assets during your non trading period, can't you source on a JIT model or are lead time too long?

kazwookie

Why does the business only trade Aug to Dec?

Can it not trade longer? also having stock level of £150K is very high for a business that only trades part of a year, does it cost you to store it? could you sell the stock as a job lot, then you would have enough.

What do you do for income Jan to July?

If you can alter some of the above you could reach your target.

bigstevex

I'm not an expert on business lending, but wouldn't that be secured against me as a director and declarable? Also business loans are really bad APR.


Stock level, the stock is something which appreciates in value over time which is where the profit ultimately comes from, generally 1-3 years timeframe, hence the stock level is always very high.


Trading is only Aug-Dec as it's primarily the Xmas period we sell to maximise profit. We don't need the income all year either as we have full time jobs. This income just comes as a dividend then once a year.

getmore4less

You could sell of some of the stock now and take the hit on the profit

how much does the company owe you?

Any relatives(like the ones gifting) that could lend the business the money short term to pay back your loans to give you a bigger deposit, you poay them back once you start trading

Depends how much you want to buy this house, you could even sell at cast/loss if it is that important to you.

If you are sitting on £150k and extracting £20k a year that's 13%
how much would a 90 day stock facility cost for 3 months on part of the stock you will sell in the Aug/Sept time frame.

it is a bit like invoice factoring where the security assets is the stock not an invoice.


if you could make 13%pa on stock you should have been buying more not paying down the mortgage