Self employed mortgage

Joeisaware539

Hi there (asking for a friend)

One of my friends was on PAYE as employed however due to the pandemic he has now gone self employed for nearly 12 months. He wants to move house soon and has build a much bigger income then when he was employed originally.

The question is:
Can he get approval for a new mortgage under slf employed with another provider? His current lender isn’t being very helpful and is worried about loosing that particular deal due to change in circumstances etc (may not qualify for same deal as self employed)

He’s current house value means he has positive equity of £104,000. Wants to move from a semi detached to a new build detached.

He’s net profit from his ltd self employment in year one he told me is £140,000 roughly. 
He’s set up to compete against his employer who wouldn’t originally furlough him out of spite.

So is closely taking his old clients back.
So he effectively wants to get new mortgage in place with new lender then tell current lender once new mortgage lender has agreed?

He told me profit in year 2 to is expected to be around £200,000 mark. (No overheads) apart from VAT. If that helps. I hope that helps, his numbers look good. He has no other borrowing or debts. 

K_S

@joeisware539 Do you have the first year accounts yet? If not it's going to be very difficult unless your self-employment is something that can be directly and clearly tied to your previous PAYE career. Even so your pool of lenders is likely to be severely restricted. I hope that makes sense.

If you have the first year accounts and a reasonable deposit, then there *should* be options depending on the rest of the scenario.

As long as you pay the ERC (if any) on the current mortgage, the current lender doesn't have anything to do with getting a home-mover mortgage from a new lender.

Joeisaware539

K_S said:

@joeisware539 Do you have the first year accounts yet? If not it's going to be very difficult unless your self-employment is something that can be directly and clearly tied to your previous PAYE career. Even so your pool of lenders is likely to be severely restricted. I hope that makes sense.

If you have the first year accounts and a reasonable deposit, then there *should* be options depending on the rest of the scenario.

As long as you pay the ERC (if any) on the current mortgage, the current lender doesn't have anything to do with getting a home-mover mortgage from a new lender.

Basically from what he told me: He has the first years accounts hence the profit figure he provided to me.

the concern is: can he get a new mortgage (self employed) deal without affecting his current lender and then switch it over so to speak to new lender as his current lender has said if he was to renew deal as self employed they can’t support him as there underwriting criteria wouldn’t be met meaning he would be out on SVR. 

big_saver_5

If he is taking customers from his old employer he may want to check that won't come back to bite him - I don't know what he does but a lot of employers will put things in contracts to stop past employees doing that

Joeisaware539

K_S said:

@joeisware539 Do you have the first year accounts yet? If not it's going to be very difficult unless your self-employment is something that can be directly and clearly tied to your previous PAYE career. Even so your pool of lenders is likely to be severely restricted. I hope that makes sense.

If you have the first year accounts and a reasonable deposit, then there *should* be options depending on the rest of the scenario.

As long as you pay the ERC (if any) on the current mortgage, the current lender doesn't have anything to do with getting a home-mover mortgage from a new lender.

He wants to basically “gets self employment mortgage” and then tell current lender as brief talks with current lender don’t support his status. 

So he can get new mortgage and then old mortgage paid off from new lender effectively etc. 

K_S

Joeisaware539 said:

K_S said:

@joeisware539 Do you have the first year accounts yet? If not it's going to be very difficult unless your self-employment is something that can be directly and clearly tied to your previous PAYE career. Even so your pool of lenders is likely to be severely restricted. I hope that makes sense.

If you have the first year accounts and a reasonable deposit, then there *should* be options depending on the rest of the scenario.

As long as you pay the ERC (if any) on the current mortgage, the current lender doesn't have anything to do with getting a home-mover mortgage from a new lender.

Basically from what he told me: He has the first years accounts hence the profit figure he provided to me.

the concern is: can he get a new mortgage (self employed) deal without affecting his current lender and then switch it over so to speak to new lender as his current lender has said if he was to renew deal as self employed they can’t support him as there underwriting criteria wouldn’t be met meaning he would be out on SVR. 

@joeisaware539 It looks like you want to first remortgage to another lender and then port the mortgage when you buy a new house. Is that correct?

Unless I'm missing something obvious, I don't see any reason why your current lender would care about you moving to another lender as long as any ERC due is paid.

Whether you will be able to later port the new mortgage or not will depend on the porting policy of your new lender and what the self employed lending criteria (for that particular lender) is at that point in future. I hope that makes sense.

Joeisaware539

big_saver_5 said:

If he is taking customers from his old employer he may want to check that won't come back to bite him - I don't know what he does but a lot of employers will put things in contracts to stop past employees doing that

I told him this, old company he worked for on its last legs and wouldn’t be around soon. 

[Deleted User]

Your friend needs to see a good independent mortgage broker. He needs direct advice from someone knowing his exact circumstances. Its hard enough people giving advice to the person seeking the mortgage, let alone via a friend.