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Is a mortgage possible in this case?

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24

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  • Alan_Cross
    Alan_Cross Posts: 1,226 Forumite
    As above, he’ll likely be able to borrow around four times his declared earnings, and will need proof of how the deposit was acquired.

    If the deposit is gifted then it’ll reduce the pool of lenders.


    Interesting. Why would that be? Sorry if the question is naive.
  • Alan_Cross
    Alan_Cross Posts: 1,226 Forumite
    edited 2 November 2019 at 11:27AM
    What help are you hoping for?

    To apply for a mortgage he will usually need:

    2 years sa302/tax year overview documents
    3/4 months bank statements
    proof of deposit and any associated gifted letters
    ID
    Sometimes a copy of credit report to verify commitments

    None of this is very difficult to obtain with a few weeks headstart even if he had none of it now.

    He would be able to borrow 4-5 times the net profit figure on sa302 if he is a sole trader, or the salary+dividends if he is part of Ltd company

    This is a very simplistic summary but without more info about earning, outgoings, credit history etc I dont think we can offer much more

    if by 'income proofs difficult' you mean he hasnt kept invoices etc over the years then that doesnt matter, lenders work off the amount submitted as earnings to hmrc




    He's a musician, self-employed. Clean credit history. No 'trading' as such. Simply earning a crust. As regards 'help', I'm looking for an assessment as to whether on the face of it he'd be able to get a mortgage in the £50k-60k region and, if so, how much this would set him back as a monthly repayment.
  • Alan_Cross wrote: »
    He's a musician, self-employed. Clean credit history. No 'trading' as such. Simply earning a crust. As regards 'help', I'm looking for an assessment as to whether on the face of it he'd be able to get a mortgage in the £50k-60k region and, if so, how much this would set him back as a monthly repayment.

    No one here can answer that based on the information you have provided. We have no details of how much he earns or what and how he is declaring this to HMRC.

    What does "clean credit history" mean? Does this means he has existing credit which he uses responsibly meeting the repayments outlines in the T&C or does it mean he has no credit history at all?

    In fact, rather than relaying second hand information to a forum your son would be better sitting down with a mortgage broker to discuss his options.
  • Alan_Cross wrote: »
    Interesting. Why would that be? Sorry if the question is naive.
    The deposit shows two things, that if it comes to repossession that there will be enough equity that the lender doesn’t lose out, but also that the borrower is the sort of person who has their finances in order and is able to save.

    How did he save up such a large amount, and can he evidence it?

    Even worse is people trying to pretend that a loaned deposit is a gift. That’s over the line into fraud, as the borrower is hiding a huge debt.
  • ACG
    ACG Posts: 24,537 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    The only question that matters at this stage is:
    Is he declaring an income to HMRC via self assessments?

    If he is not declaring an income then he is not going to get a mortgage. If he is, then there is a possibility subject to the rest of his income and expenditure.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Alan_Cross
    Alan_Cross Posts: 1,226 Forumite
    He IS declaring his income, as the thread makes clear.
  • Alan_Cross
    Alan_Cross Posts: 1,226 Forumite
    No one here can answer that based on the information you have provided. We have no details of how much he earns or what and how he is declaring this to HMRC.

    What does "clean credit history" mean? Does this means he has existing credit which he uses responsibly meeting the repayments outlines in the T&C or does it mean he has no credit history at all?

    In fact, rather than relaying second hand information to a forum your son would be better sitting down with a mortgage broker to discuss his options.


    Which is what he probably will do. I'm looking to supply him with some encouragement based on what I'm told here. He is quite despondent at the moment and in a 'no-lender-will-consider-me' mindset.


    Ok. If nobody can help, I'll leave you guys in peace and quiet.
  • Alan_Cross
    Alan_Cross Posts: 1,226 Forumite
    The deposit shows two things, that if it comes to repossession that there will be enough equity that the lender doesn’t lose out, but also that the borrower is the sort of person who has their finances in order and is able to save.

    How did he save up such a large amount, and can he evidence it?


    Even worse is people trying to pretend that a loaned deposit is a gift. That’s over the line into fraud, as the borrower is hiding a huge debt.


    Partly through accrued savings and partly via an inheritance.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Alan_Cross wrote: »
    He IS declaring his income, as the thread makes clear.

    With all due respect. £50k of cash savings suggests a reasonable level of income from self employment. A £60k mortgage shouldn't therefore be a challenge if the income is being fully declared.
  • Alan_Cross
    Alan_Cross Posts: 1,226 Forumite
    Thrugelmir wrote: »
    With all due respect. £50k of cash savings suggests a reasonable level of income from self employment. A £60k mortgage shouldn't therefore be a challenge if the income is being fully declared.


    As mentioned, he would have a deposit of c£100k. This would be made up of a £50k gift from us, his parents, and c£50k of his own, which is in turn partly the result of savings and partly an inheritance.


    I take your 'shouldn't be a challenge' comment as just about meeting the thought of whether it would be possible. I still await ideas as to how much a £50-60k loan would cost him monthly.
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