Mortgages for Self-Employed - Nightmare.

[mothermachine]

No!! Do not do this now.

This is exactly what I was planning to do, but my mortgage advisor advised against it.

You won't have time to build up a decent credit history and any attempt to apply for other credit/loans now, will go against your mortgage application.

Speak to your broker if unsure, but it is exactly what I had planned to do and was then advised against it.



This should be enough to open up most deals to you. Your broker should hopefully be able to advise who is best to approach for an 'in principal' agreement.



Good luck, definitely hard times, but on the plus side it looks like you're in a good position with the deposit, which counts a lot these days. Hope it goes well.

Thanks mate. Yep. You're right. Just spoke with him and he said the same. We need to keep the credit checks to 0 or a minimum until we're ready to apply. Apparently if you have 4 checks done within 1 year your score decreases...

Great advice here. Thanks all.

 

[Jock]

I'm having a nightmare with exactly this at the minute. Looking to move for scholling reasons for my daughter but its proving next to impossible due to be self emplyed. Not to mention I want to become limited but it resets the amount of accounts you haveso would start from scratch.

I've got a fairly decent deposit but my main stumbling block are the brokers themselves. I get the impression because theres more work involved they simply arent interested. I've used some that have come highly recommended and they just drag their feet constantly.

 

[mothermachine]

I'm having a nightmare with exactly this at the minute. Looking to move for scholling reasons for my daughter but its proving next to impossible due to be self emplyed. Not to mention I want to become limited but it resets the amount of accounts you haveso would start from scratch.

I've got a fairly decent deposit but my main stumbling block are the brokers themselves. I get the impression because theres more work involved they simply arent interested. I've used some that have come highly recommended and they just drag their feet constantly.

I've found the same thing. As soon as you start talking about Net Profit v Taxable Income or Mat Leave or any "barriers" their eyes glaze over and the excuses start coming as to why it's going to be tough. And out of the 5 brokers I've spoken to only 2 of them actually listened to what I was saying and took in our potential issues. The rest didn't listen and found us some "great deals!!!" that were totally irrelevant had they mentioned our actual situation to the lenders.

Rubbish!

 

[Jock]

Sounds the exact same as me.

I had one gu who reminded me of Del Boy and even got me an agreement in principle, bearing in mind i gave him all the fact when we met. then when i read the small print i had to submit 3 years accounts which i dont have and had explicitly told him that I dont. Phoned him up and he just reckons i've to ignore the small print!

The two recent ones, again, i sat down for an hour each and had to chase both of them despite being told they would be in touch in days. Weeks later i have to phone them and both cases were fairly similar where they couldnt help, but again started talking about things that were wrong such as saying they wont touch anyone with one years accounts despite me telling them I have two!

so still hunting at the moent for a decent adviser.

 

[Hatter The Mad]

When mortgage lenders look at a self-employed person's income for the purposes of working out a total income to multiply by 4 or 5 x which they are willing to lend, do they look at your Net Profit (that is, your total profit less Admin expenses, before tax) or do they look at your Taxable Profit (that is, your total profit less Admin AND less Capital expenses, before tax).?

I am self employed. Last year I checked with all of the major brokers and banks, all wanted to consider net. The 'friendliest' was Santander who were willing to consider last two years' average (rather than three). Sounds like a two year average would make you worse off, though.

In order to bump that average, I made sure that I removed most (legitimately) tax deductible items from my most recent years' return. I paid tax on the whole lot, but got a higher lending cap. Unless you're unlike the majority of sole traders who file their returns at the last minute, I presume you still haven't filed your 2011-2012 return? If so, you could use the same trick.

If you wanted to cheat and were willing to lie, you could rid your 2011-2012 return of tax deductible items completely get your mortgage, then amend the return before the tax bill comes in (oops, 'third party' entered the wrong number! Of course my expenditure wouldn't be zero.). Heck, you could even 'mistakenly' book 2012-2013 income into 2011-2012. Your call, though.

 

[Hatter The Mad]

We can't do much until I've got 12/13's accounts in because 11/12 took a dip, which looks bad... hate this recession. Can't wait until we're out of it at last. I've only ever run my business during it, so I've no idea what it's like to be self-employed during a boom. I bet it's rather nice!

This is off-topic and may sound harsh, but it's an eye-opening piece of advice I received three years ago: it's not the economy that sucks, it's you.

Best of luck

 

[Jock]

Dont really think that advice is all too applicable to the OP's business which is the same as my own, especially when architects and builders are going under every week, and something like visualisations are one of the first 'extras' to be cut when money is tight.

Not to say you cant be succesful in the construction industry during the recession but theres no doubt its far more difficult.

 

[mattyprice4004]

Question - does this sound right to you guys? There might be an element of discrimination here, or is it just another thing that lenders dislike and can use as a reason not to lend?

Thanks,

Discrimination? Seriously?

You just have to look at how many new mothers give up work after having kids to see their logic, I'm sure you must be able to see how much of a risk that'd be to a lender.

 

[mothermachine]

Discrimination? Seriously?

You just have to look at how many new mothers give up work after having kids to see their logic, I'm sure you must be able to see how much of a risk that'd be to a lender.

It's only an increased risk if, jointly, we aren't able to cover the costs. It should not be an issue at all what our situation is, or whether or not she's on leave, if we can cover the costs through my own income and other sources. Although it clearly is being treated as one. I can see why. But these applications are often run through a computer first and simply rejected on these basis, even if the "reality" is far more complex and repayments wouldn't actually be an issue.

So yes, seriously.

 

[Jock]

Just to explain the idiocy of the way in which things are dealt with.

I've had my current house for 7 years and never missed a mortgage payment and considering that the last year has been entirely self-employed. My current mortgage provider refuses to put me on a new deal which is less money than i currently pay because they say on paper i cant afford it, but they are quite happy for me to stay on the current mortgage which is considerably more. The difference being simply that i'm self employed.

I do understand there is more risk but sometimes these things need a bit of common sense applied to them rather than simply going of what the computer says.

Then just to rub salt into the wound when i wanted to go 'interst only' for a couple of reasons, i'm told that they refuse because, get this...I earn too much!