First time buyer, self employed.

Scottish_Dorset

Hello,

My son has found a house (freehold) he would like to buy. He is self employed and also in the last 18 months set up a LTD company. The house he is looking at is £115k, it failed to sell at auction. He has a deposit of between £13-15K. Unfortunately his net income is not great, around £18k this year. The LTD company makes money, but he hasn't taken a salary out of it. The profit would not be great, around £6k. He also has a loan on a vehicle, paying £300 per month on it.

He is hard working and has good cash flow. I don't think I can be a guarantor as I have a mortgage with my husband (not my son's dad).

Are there any suggestions that would help him move forward with this property?

Many thanks.

El_Torro

From what you say this is a Buy To Let, though you don't actually say that outright.

The lender will take his income into account, though they're more interested in what the monthly rental income will be and how this compares to the monthly mortgage payments. As long as the rent is 125% or more of the mortgage payment he should be able to get a mortgage.

It's worth noting that most of the crowd that lurk around here are not big fans of BTL. You might get some posters saying that it's not a good idea for your son to become a landlord. I don't necessarily disagree with them either.

Scottish_Dorset

He is a first time buyer, his work is plant hire and HGV driving. He is currently looking for his first home. He may consider BTL in the future, as his businesses progress.

Thanks for your information, it is food for thought.

El_Torro

Ah, ok. If it's a residential property for him to live in then forget my last post.

If he has a £15k deposit on a property worth £115k then he needs to borrow £100k. An income of £18k probably won't cut it but if he is making an extra £6k a year from a Ltd Company then that might just be enough. Probably worth speaking to a mortgage broker to see if it's worth proceeding with this.

Lenders might want to see more than 18 months worth of reliable income from a Ltd Company before considering it, which could be an issue.

ACG

This wont be easy, but there is a chance it can be done as el torro suggests. It would involve mixing a few bits of quirky criteria which is doable but I think only one lender can potentially do it at normal rates. The others might charge a bit of a premium.

Get your son to speak to a good experienced broker and there is a chance. But I wouldnt want to say it can definitely be done.

elsien

My first thought is why it failed to sell at auction and whether he’ll have enough money to address whatever that reason is.