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Self Employed - Can I do better?

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I work for an overseas company so I have a full-time rolling contract that has been in effect for 3+ years. I invoice them each month for a fixed amount and do self-assessment tax returns. My other half is in full time employment. 

First conversation with a broker yielded a rough estimate of what we could borrow. With either a 10% or 15% deposit, it's working out at about 4.6x our earnings. But the issue here is my "earnings" are being based on the average of the two latest tax returns. I've had a significant pay rise recently, so "earnings based on 2 years tax returns" is nearly a third less than what I'm actually earning now. This puts a pretty big dent in what we can borrow and is really going to restrict what kind of properties we can look at.

My question is, can I realistically do any better? I know it's a quirk of the system but it seems crazy that an employee earning £15k less than me could borrow more right now. Are there any brokers/lenders that won't just see "self employed" and recognise I have a contract with fixed income.

Comments

  • ACG
    ACG Posts: 24,532 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    There are lenders who will work from 1 years accounts.
    Whether they will actually accept your income is another matter, I think they will but it will depend on the quirks of the case.
    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.
  • K_S
    K_S Posts: 6,877 Forumite
    1,000 Posts Fourth Anniversary Photogenic Name Dropper
    I work for an overseas company so I have a full-time rolling contract that has been in effect for 3+ years. I invoice them each month for a fixed amount and do self-assessment tax returns. My other half is in full time employment. 

    First conversation with a broker yielded a rough estimate of what we could borrow. With either a 10% or 15% deposit, it's working out at about 4.6x our earnings. But the issue here is my "earnings" are being based on the average of the two latest tax returns. I've had a significant pay rise recently, so "earnings based on 2 years tax returns" is nearly a third less than what I'm actually earning now. This puts a pretty big dent in what we can borrow and is really going to restrict what kind of properties we can look at.

    My question is, can I realistically do any better? I know it's a quirk of the system but it seems crazy that an employee earning £15k less than me could borrow more right now. Are there any brokers/lenders that won't just see "self employed" and recognise I have a contract with fixed income.
    @connoisseurus_Rex Based on the limited info in your post, with respect to mainstream lenders, I can't think of anyone who would consider your income as 'employed'. 

    Depending on the evidence (as per what the lender would want to see) stacking up, a couple of specialist lenders might take a view on considering it as employed income but the rates are going to be higher and affordability calculations might actually be a bit stricter so not entirely a given that you'd be a lot better off.

    Your best shot is probably as per what ACG said, getting a lender who will look at most recent year figures for affordability.

    As soon as the income originates overseas, it makes the case a bit quirky as different lenders will look at things differently.

    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. 

    PLEASE DO NOT SEND PMs asking for one-to-one-advice, or representation.

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