Need a loan for home extension, but covid/being self employed has plummeted my income on paper

Gasgirlnikki

Hello all. I have planning permission granted for a double rear extension to my home. I'd like a loan to pay for this, as I'm not due to remortgage until 2024 and am tied in. I'm self employed and have not been allowed to work in lockdowns, so my earnings for the 2020/21 year are low to say the least! Low as in under 10k. I've received generous universal credits whilst off, but not sure if this counts as income. Of course if we get through next year without any lockdowns, my earnings will soar again and look a lot healthier, but ideally I'd like the extension done now and not in a year or 2 when my books look better. I have a large amount of equity in my home, more than double what is actually left owing on the mortgage. Any ideas how I can borrow to finance the home improvements please? Many thanks

[Deleted User]

With such a low income, you're going to need to wait. The only other option would be equity release but you don't sounds to be of an age for that.

Ebe_Scrooge

Gasgirlnikki said:

 ideally I'd like the extension done now and not in a year or 2 when my books look better

Ideally a lender would like to offer you a loan in a year or 2 when your books look better, not now.

Sorry, that's just the way it is, you're going to have to wait.  Would you lend money to someone who told you "I've earned very little over the last year, but I promise you I'll earn more this year - really, I will, I promise".

Herzlos

Your only option is to see if your mortgage lender will top up the mortgage, which you can normally do without incurring early repayment penalties.
Until your earnings start to soar again, and you're relying on Covid restrictions to ease (which means relying on common sense) you're going to have a hard time getting a large loan.

Thrugelmir

Gasgirlnikki said:

Hello all. I have planning permission granted for a double rear extension to my home. I'd like a loan to pay for this, as I'm not due to remortgage until 2024 and am tied in. I'm self employed and have not been allowed to work in lockdowns, so my earnings for the 2020/21 year are low to say the least! Low as in under 10k. I've received generous universal credits whilst off, but not sure if this counts as income. Of course if we get through next year without any lockdowns, my earnings will soar again and look a lot healthier, but ideally I'd like the extension done now and not in a year or 2 when my books look better. I have a large amount of equity in my home, more than double what is actually left owing on the mortgage. Any ideas how I can borrow to finance the home improvements please? Many thanks

If you aren't earning, how will you fund the repayments? 

MEM62

Underwriting on loans for the self employed is brutal at the moment.  We came to the end of the fixed rate deal on our mortgage and had to re-mortgage based just on my salary.  My wife, as a director of a company that she owns, is classed as self employed and the hoops we would have had to jump through to base the mortgage on both salaries were ridiculous.      

Gasgirlnikki

I am allowed back to work on 12th April, and my diary is bursting with clients. With no more lockdowns I'm confident I could pay the loan off in 18 months. With more lockdowns it will take longer of course 

[Deleted User]

 Once you've been able to demonstrate several months of interrupted work again, you can reconsider your borrowing options.

 And by then of course, you'll have saved around half of the money you need, so your required borrowing will be much less.

macman

Your income hasn't just 'plummeted on paper'. Your income has plummeted in reality. 
I might become a millionaire tomorrow, but nobody is going to lend to me today just on the basis of that possibility.

Gasgirlnikki

macman said:

Your income hasn't just 'plummeted on paper'. Your income has plummeted in reality. 
I might become a millionaire tomorrow, but nobody is going to lend to me today just on the basis of that possibility.

But only due to covid. I was hoping some lenders might take loss of earnings due to covid as exceptional circumstances out of my control 🤷‍♀️

[Deleted User]

It doesn't matter whether the loss of earnings were within your control or not. It's still a loss of earnings.