Self-employed and wanting a mortgage...

thickinthehead

Hi,

I am looking to get a mortgage with my husband using one of the Key Worker assisted schemes where you can get a zero % loan from a housing association and a mortgage lender of approximately 33%. The problem is my husband has just become self-employed so has little evidence of accounts etc (2 months). Our credit history is not wonderful (but is okay) due to the odd bounced direct debit (but not in recent months). My income is 18K, my husband's is 10K and we get about 10K in tax credits (used to cover childcare costs). We will need to borrow about 100K and have no particular savings for a deposit. I consider that we can manage a mortgage payment without having to tighten our belts too much.

What are our chances of getting a mortgage?, preferably at a competative rate (hahaha)? I feel as I type this the chances are unlikely... but we are desperate as we have 3 children with a big age gap in a pokey 2-bed council house.

Any relevant advice would be appreciated.

Northants_Simon

It is difficult for the self employed to get a mortgage. I'm going through the same process. In my case I have been tradig for 8 years. All the lenders ask for 3 years audited accounts. I have found that 3 years tax returns can be used instead of audited accounts, providing you have a submit receipt from HMRC.

In my case I have the accounts and a good income, yet still got turned down by some banks. I finally got accepted by Halifax, but they do insist of 3 years accounts.

If you haven't got the accounts your only choice is Self Cert. These are very difficult to get at present are generally you will need a 25% deposit.

Northants_Simon

Also forgot to add, I'm also using one of the Government equity schemes (not the keyworker one as I'm not a keyworker). Only certain lenders will let you use these. I don't think you will get a self cert mortgage.

You certainly won't get a competitive rate. I have a perfect credit and am being offered an interest rate of 6.29% as I'm using a Government equity loan rather than my own money to pay the difference between the mortgage and purchase price.

Gloster_Advise

Hi

Sounds initally like too may factors are going against you. Self cert is the only option you have as your other half cannot provide proof of income.

)just thinking out of the box, unless you find a lender who will take your income and the tax credits into account without using your husbands income. Affordability lending needed.

On a joint income of £28K, how do you get £10K tax credits? are all the children under 3?



Regards
Si

Northants_Simon

Gloster_Advise wrote: »

Hi

On a joint income of £28K, how do you get £10K tax credits? are all the children under 3?



Regards
Si

My guess is that was worked out on the 18k income. As her husband is new to self employment I don't see how he knows he has made £10k a year (he only started 2 months back).

You need to be very careful about tax credit overpayments. When I first started business my income was calculated on a very small figure. It then took 18 months to get my first years accounts (a year of trading and then time to prepare and submit the tax return), by which time I had been overpaid in tax credits.

thickinthehead

The tax credits award is based on our income before my husband became self-employed which was the same amount of money (but wasn't flexible if one of the children was sick hence the change of occupation). The award is so high as 2 of the 3 are in nursery care at a cost of 12K a year. I have checked and triple checked the tax credits stuff as it makes me nervous.

Very good point about maybe doing it on my income alone (plus tax credit). Would that income be sufficient to secure a mortgage for about 100K? Plus, would it matter that we have a joint bank account (I'm only thinking about how your credit is linked when you have a joint account)?

PS, thanks for the response(s).

K