Self employment, remortgaging and maternity leave!

the-baby-beatbox

I'm wondering whether anyone more savvy with mortgage matters might be able to offer any pearls of wisdom...

This will be long but want to paint the full picture as I feel it's all relevant! 

I'm self employed (I work under my own limited company if that makes any difference). I have been for 7 years so I have all the books to back me up. 

DP is also self employed and has been for even longer than me. They were a lot less irresponsible in their 20s than me, so when we bought our house, I paid towards the deposit and they got the mortgage. We pay equal mortgage and bills. We have a deed of trust. I'm not worried about this, but it's relevant. 

We sold our house for more than double what we bought it for last year and ported our good fixed rate mortgage over to a new house, with an additional £50k bump up mortgage. We have £265k equity in the house, which I feel is good for our second home. 

Now the problem: we have a substantial amount of debt owed to family that we borrowed for IVF that they now need (£30k). I'm also pregnant and have an unpaid and unsaved for maternity leave looming. We still have time to get some money together for a short leave, but we're talking weeks rather than months. We'd also like a new kitchen. So we'd like to find around £60k. 

Our fixed rate is up in December, so I was thinking we could remortgage and release some equity. DP borrowed to their maximum potential, but we could apply together for a joint mortgage now. 

My credit score isn't great (made lots of mistakes in my 20s!), but I have defaults that will be removed in October this year and a solid payment history for the last 4 years. I've made a real effort to clear any personal borrowing and feel that by the end of this year my credit score will be good enough for high st banks to consider me. 

If we wait until the fixed rate is up in December, there's going to be a gap of earnings from my modest mat leave (and DP's parental leave) on our bank statements. Even though we have good earning history, I'm worried this will impact us. Does anyone have any experience of this? 

I suppose I'm weighing up 2 options:

Remortgaging early in July before baby is born, potentially onto a very high rate because of my credit score. But we'll have good bank statements showing earnings.

The other option is to wait until December when the fixed rate has expired, remortgage and potentially be able to get a better rate if my credit score has improved, but we won't be able to show bank statements showing earnings as high as they were. 

Also open to any other options! We have explored loans to pay this debt but nothing is as feasible as remortgaging seems. Keen to hear opinions. 

Thanks in advance for any advice!

DullGreyGuy

You're not self employed if you operate via a limited company, you are a company director.  For mortgage applications etc you'll be treated similar to as if you were self employed but that doesn't change your legal status. 

If you were self employed then you would have to claim Maternity Allowance whereas as part of a company SMP may be better.

Problem with applying now will be the fact you will still have to declare your up coming drop in income for maternity leave. 

ACG

Limited company directors show self assessments rather than payslips. 
So in terms of proving income, your self assessment from April 2024 which should should most of the last 12 months employment should work. 

The issues that will likely crop up:
1) If they ask for business bank statements, obviously that is going to show a lower (if any) income. 
2) If they ask about change in circumstances. 

I have never done a mortgage for someone on mat leave and self employed. But when employed, lenders are generally more interested in when you will return to work and in what capacity (full time, part time) and whether any childcare costs will be incurred. 

I assume it would be the same for self employed applicants. 

Probably one for a broker, but depending on the answers to the above, I think you will be fine.