Unable to meet affordability even though it's plenty affordable

taniel

My husband and I are looking to buy a house but coming up against a brick wall due to unreasonable lending requirements (my broker's words not mine).
My husband is employed and I am recently self employed. We employ a nanny to look after the kids and her salary is the largest expense we have (about 1.5k a month including taxes etc).
I now have a steady income from send employment which easily covers twice the nanny expenses and more.
Our required borrowing figure is only about 4x husband's income and I completely understand that my self employed income wont count because I only recently started. But the broker says not only will my self employed income not count, the nanny's expenses make a mortgage "unaffordable" in the lender's eyes!
It doesn't seem fair as I have more than 6 months of bank statements proving that I can (and have been) easily covering the nanny's cost through the self employed income.
He is waiting to go self-employed as well but can't until we get a mortgage.
This can't be that uncommon a situation can it? Is there any work around at all that doesn't involve buying the house just in my husband's sole name?
Thanks!

MattMattMattUK

Banks are particularly wary of affordability at the moment, it is not unsurprising, it is not if you could afford it based on your bank accounts, but on the rules set that apply to everyone. 

taniel said:

Is there any work around at all that doesn't involve buying the house just in my husband's sole name?

You will still need to be on the mortgage and the deeds, but your income might not be taken into account, that does not mean that you are not on the paperwork and jointly responsible for paying the mortgage, it just means your income will not factor into the lending limit. 

allygate

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ACG

allygate said:

Deleted

Soooo you broke the law and committed Mortgage fraud. 
I understand things happen and people try to improve their chances, but if this was ever found out it would not be a case of pleading ignorance, it would look 100% like you did everything you could to hide your expenses. You would be on National hunter  in no time. 

allygate

ACG said:

Soooo you broke the law and committed Mortgage fraud. 
I understand things happen and people try to improve their chances, but if this was ever found out it would not be a case of pleading ignorance, it would look 100% like you did everything you could to hide your expenses. You would be on National hunter  in no time. 

Absolutely @ACG, I know   It was fully deliberate and done with our eyes wide open.
It was worth the risk for us but of course may not be for the OP.

ACG

taniel said:

My husband and I are looking to buy a house but coming up against a brick wall due to unreasonable lending requirements (my broker's words not mine).
My husband is employed and I am recently self employed. We employ a nanny to look after the kids and her salary is the largest expense we have (about 1.5k a month including taxes etc).
I now have a steady income from send employment which easily covers twice the nanny expenses and more.
Our required borrowing figure is only about 4x husband's income and I completely understand that my self employed income wont count because I only recently started. But the broker says not only will my self employed income not count, the nanny's expenses make a mortgage "unaffordable" in the lender's eyes!
It doesn't seem fair as I have more than 6 months of bank statements proving that I can (and have been) easily covering the nanny's cost through the self employed income.
He is waiting to go self-employed as well but can't until we get a mortgage.
This can't be that uncommon a situation can it? Is there any work around at all that doesn't involve buying the house just in my husband's sole name?
Thanks!

I think your broker is just being polite. The lender is not being unreasonable. 

You have 6 months of bank statements showing an income, great. But what happens in month 7-12 if you get a large one of expense each year? You might also have 6 busy months and 6 quiet months. If a lender asked for my last 6 months business statements and used that to work out income, it would look like my turnover was about £40k more than it is and my expenditure is about £5-6k less than it is. That is because our busy period is March to October and in December/January we have corporation tax, PI insurance, FCA fees etc to pay. 

The idea of self assessments or accounts if that they can see a full years worth of income after expenses or income pulled from the business. 6 months statements only shows half the story and that could be the good half. 

ACG

allygate said:

ACG said:

Soooo you broke the law and committed Mortgage fraud. 
I understand things happen and people try to improve their chances, but if this was ever found out it would not be a case of pleading ignorance, it would look 100% like you did everything you could to hide your expenses. You would be on National hunter  in no time. 

Absolutely @ACG, I know   It was fully deliberate and done with our eyes wide open.
It was worth the risk for us but of course may not be for the OP.

Fair play. I always respect people a bit more if they are just honest. 
As a broker though, there is not a chance I would do this. It would be me losing my job if I was found out to be involved. 

taniel

Thanks for the comments and advice. We will think about it and act accordingly. After working so very hard to save up a sizeable deposit and start a successful business, it's hard to resign myself to renting for another couple of years.

allygate

ACG said:

allygate said:

ACG said:

Soooo you broke the law and committed Mortgage fraud. 
I understand things happen and people try to improve their chances, but if this was ever found out it would not be a case of pleading ignorance, it would look 100% like you did everything you could to hide your expenses. You would be on National hunter  in no time. 

Absolutely @ACG, I know   It was fully deliberate and done with our eyes wide open.
It was worth the risk for us but of course may not be for the OP.

Fair play. I always respect people a bit more if they are just honest. 
As a broker though, there is not a chance I would do this. It would be me losing my job if I was found out to be involved. 

We didn't go back to the same broker, just used one of the online ones as at that point it was literally as vanilla as you could get - a 60% LTV mortgage on a freehold house based on 3x PAYE income.

@ACG PS: I'm deleting my comment, I don't want to encourage fraud on a widely ready forum like MSE. I would be grateful if you could do snip off the quote in your comment. Thanks.

ACG

taniel said:

Thanks for the comments and advice. We will think about it and act accordingly. After working so very hard to save up a sizeable deposit and start a successful business, it's hard to resign myself to renting for another couple of years.

You just need 1 years trading to use your income.

tervozina

Banks are counting affordability on a stress rate. So if your mortgage rate went up to 14% for example, would you still be able to afford monthly payments.