Self Cert Mortgage

mortgagehunter1

Has anyone any experience of these. I need to get one and am aware that the availability and deals on offer on these have declined, among with everything else recently.

I need approx 150k (house price 190k hopefully), which i would be putting a deposit of 22%/25% down- 40k ish. At a push if needs be i could put down a deposit of 90k but i would rather not as it involves taking money from my business account which has other tax implications for me.

What sort of rates are available on here, i have a good track record - i am currently with Northern Rock (fixed term ends Sept this year), was with Nationwide before this and have no defaults etc....

Please let me know your thoughts.

_Andy_

What would be the reason you feel a self-cert mortgage is appropriate/needed?

Rabiddog_2

Expect to pay more, regardless of your track record. Self cert mortgages (or sub- prime in the USA) always tend to be a little bit more expensive, so in these times I would expect them to be quite a bit more expensive. Plus the fees of course a few thousands possibly? and not to put too fine a point on it, the lenders tend to be Barstewards.

mortgagehunter1

Yes, the reason for self cert mortgage is due to my circumstances which are that i am self employed and have been for less than 2 years. My wage is very low, below the tax threshold but this is supplemented with expenses and child tax credit/working tax credit child benefit, all of this means that i have a net income of approx £700 per week.

Any thoughts?

MortgageMamma

whats your gross income including benefits? whats your credit score like? lets see if it can be done on a full status basis you might just scrape through. No point self certing and paying over the odds if you don't have to.

mortgagehunter1

Hello, Yes i think it would be a struggle to be honest.
My credit score should be fine, i have never defaulted on any payment for anything and i can usually get good rates on mortgages, loans etc...

I bill my client £3900 + VAT each month = £4700 approx. I am on the flat rate VAT scheme so only pay at 10% but charge at 17.5%, so i come out with (after i have paid VAT) of 4124. Multiplied by 12 = £49491. I have a corporation tax liability on the 'profits' (approx 30k @ 20%, so this is 6k a year) = 24k profit. Out of the other 20 (diff between 50k turnover and 30k pre tax profit) i take 10k in salary (5k wife and 5k me) and 10k expenses. I plan on leaving the 24k in my business account. i then get WTC and CTC (this is about 9k a year) plus child benefit which is approx 1.5k

Sorry for the lack of structure/confusion above.

So ths works out annually at

Personally - Net Income = 30.5k

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My Wage 5k
Wife's 5k
Expenses 10k
CRC/WTC 10.5k

Left in Business 24k

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I have 2 years of business profits left in my business account which equates to 55k at the moment, so i could use this but am loathe to do this as the 10.5k CTC/WTC disappears for this year as my 'taxable' earnings for the year will be way over the threshold. Also this is earning me £250 a month in interest.

This is why i feel it unviable to get a straightforward mortgage, due to the low declarable income.

Thanks for all your help and if you could add anything else please do.

MortgageMamma

I dont think you need to self cert, I think this can be done on full status. There are lenders which will accept 100% wtc credits as income and as long as you don't have any cc's or debts in the background this could just about fit for you. Whats your line of work if you dont mind me asking? are you a limited company or a sole trader?

mortgagehunter1

Thanks very much for your time. i am a limited company.

Cazza

Do you draw any income as dividends?

mortgagehunter1

No i dont - if i did as far as i can see this would be declarable income, even if it would be personally tax free - so this wouldnt work that well for me at the moment.