Mortgage advice from 1st time buyer

jonny5_3

Hi people, quick brief concerning my situation:
Both me and my GF are 24, im self employed and my GF is employed.

We have offered on a flat for £142,000 which has now been accepted and we are currently in the process of organsing the mortage with an advisor.
Now i am slightly concerned about the mortgage for myself. I have had a short meeting with the advisor who lets say is probably not going to follow the rules if you know what i mean for me to get a mortgage.

I dont have a year of accounts just yet but do earn enough to pay the mortgage and we also have 10% deposit ready. The advisor is doing the mortgage through Abby, and he is putting me through as employed on the quote.

Now i'm not too bothered about the advisor 'bending' the rules slightly if its gonna get me a mortgage cheaper than a self cert but what im slightly worried about is what details Abby will request in order for the mortage to be accepted? The advisor says its normally just a employers reference which would be no problem to do but what else could they ask?

What i dont want to happen is after paying all the legal fees etc the mortgage may not go through, however the advisor is adament that the mortgage will go through no problem and i have no need to worry as he does this all the time.

What do people think?

zag2me

The mortgage company will contact your employer directly and ask for them to sign a statement about your earnings and details.

jonny5_3

By letter or phone? Also is there a chance they will ask for more details such as pay slips or other?

herbiesjp

They can ask for any information they think is necessary to approve the mortgage application.

I would be very wary of going down this route - if you are self employed, then that means you are self employed and not employed. Lying on a mortgage application is fraud and could lead to serious consequences for you all concerned with the application.

It sounds like your adviser does not have any good relationships with any lenders, as if this was the case, he would proably be able to go to them and discuss your situation up front and get it agreed.

Without knowing any of the details about your purchase, it is difficult to say what kind of rates would be available, but at least you would be avoiding potential problems.

This may seem like a little bending of the rules, but this is exactly what gives the industry a bad reputation and if you agree to go ahead with it, you help perpetuate it.

You know its wrong by being worried about it, and asking what kind of information they will ask for.

Debt_Free_Chick

Eventually, you will have to sign something ... normally an Application Form. That will ask for your employment details and also ask you to confirm that everything on the form is true & accurate.

If you sign that form with "employed" as your status, both you & the adviser are probably guilty of mortgage fraud. Just don't go there!

jonny5_3

Thanks for the replies. In terms of figures, we have 10% deposit and are on a vairable rate for 2 years starting from 4.79%, repayments are £504.

If we go down the self cert route we have rate of 5.9% and repayments of £593. So as you can see quite a bit of difference when your a low incom earner.
Obviously the last thing i want to do is contribute to what seems to be an industry already slightly corrupt, but you have to wonder why it is like this in the first place.

With house prices so high, it seems impossible as a first time buyer to step on to the property ladder and the only way that seems currently affordable is a route which certainly can be conceived as slightly 'off track'...

The fact is i earn enough money to pay for the mortgage but just dont have the records to back this up, so im stuck to paying an expensive mortgage and being overall worse off.

I appreciate both your views and am actually having a meeting this evening with my advisor so will discuss all doubts with him then.

herbiesjp

The thing is, you might not need to go self cert with some lenders, they will take that track record you have got to date.

There is more that one way to get a mortgage agreed the correct way.

What is the purchase price?

Do you currently rent? WHat is your current rental figure?

jonny5_3

The purchase rate is 142,000 and i currently live with parents. My outgoings are currently £401pm (this includes mobile phone, credit cards, etc however this also includes my sports car which i will sell shortly which costs £200pm so my outgoings will be back to £201pm) and my income is approx £1000pm at the moment, this may go up from september looking at turnover trends from last year.

Total turnover from my business from the last 2 months:
April - Turnover = £11,800 Profit = £2800 Costs = 1800 = £1000
May - Turnover = £14,800 Profit = £3548 Costs = 2400 = £1148

meanmachine_2

OK, now these sorts of posts really make me mad and I'm sure get people like herbie irate as well.

It's dodgy brokers like the one mentioned here that explain why house prices are overvalued by at least 30%.

I understand the frustrations of the OP - I'm a potential FTBer myself. However, I'm of the opinion that I'd rather wait for the market to correct rather than overstretch myself and join in with this madness.

This broker not only sounds dodgy, but is also an idiot. Of course Abbey will check that you're an employee. So who are they going to contact? What company are you going to put on your application? Are you going to make one up, or get your mum to pretend? Madness.

I wonder how many other FTBers have also committed fraud like this. Personally I know of dozens who have lied-to-buy and left themselves vulnerable to ANY change in the int rate. That's one reason why the economy has suddenly ground to a halt.

Sorry to have a rant. But I'm sure decent people like herbie must feel the same as me. :mad:

How can a guy earning c£15K a year be allowed to borrow 10 times his income?!!!!

payless

Don't go there ..
Abbey would normally expect a payslip and to be honest if someone is employed they would wonder why one was not avaialble - IF they agree to go for a ref instead, they might be more curious and look into the setup in more detail

Remember even if they do make an offer, they can withdraw the offer at a later stage if they consider fraudulent application- even after exchange of contracts ( seen it done after someone forged a payslip .... not one of my clients I add) think what a mess that would cause

I do feel sorry , in that your income might be safer than someone employed for the same time ..... but those are the rules.... have you spoken to your own bank, who might be happy in seeing the money going thro' your account ( I don't know how much your GF earns so can't comment if buying over the amount you can afford )

herbiesjp

I think we are forgetting that there is a second employed applicant also - what is her income?