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    • C.w Wilson
    • By C.w Wilson 10th Jul 18, 11:03 AM
    • 3Posts
    • 0Thanks
    C.w Wilson
    How do mortgage lenders calculate self’s employed income?
    • #1
    • 10th Jul 18, 11:03 AM
    How do mortgage lenders calculate self’s employed income? 10th Jul 18 at 11:03 AM
    Me and my partner are looking to buy our first home in the next year. I’m in full time employment earning Ł21000 a year, and my partner is self employed. I was wondering how they calculate a self employed income? As in last year she earned roughly Ł16k, and is expected to earn roughly Ł18k this year, will they take an average of both years or will they use the most recent figure? Any help would be greatly appreciated as we are trying to work out how much we will be able to borrow. We were hoping to get Ł130k with a Ł10k deposit... is this unrealistic?
    Thanks again.
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    • sal_III
    • By sal_III 10th Jul 18, 11:11 AM
    • 780 Posts
    • 782 Thanks
    • #2
    • 10th Jul 18, 11:11 AM
    • #2
    • 10th Jul 18, 11:11 AM
    It's the average of the last 2 years of accounts if the figure goes up, so in your case Ł17k.

    Which makes borrowing Ł120k at 92% LTV next to impossible
    • kingstreet
    • By kingstreet 10th Jul 18, 11:37 AM
    • 34,759 Posts
    • 18,904 Thanks
    • #3
    • 10th Jul 18, 11:37 AM
    • #3
    • 10th Jul 18, 11:37 AM
    Lenders take net profit, which is gross income less expenses/allowances but before tax and NI.

    Although many lenders take an average when the latest year's income is higher, there are a handful who work from the latest year's so will potentially lend more.

    Independent broker help would be useful with this.
    I am a mortgage broker. 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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