self employed and mortgages

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joescrivens

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Currently being self employed we'll have enough money come autumn for an 85% mortgage.

But am reading different rules around who will give you a mortgage or not. Only been self employed for 1 year and reading that they'll need three years accounts.

Then also read if you are the director of a limited company they'll look at just your last years net profit.

on a photography site I would imagine a lot of people self employed with mortgages - anyone done one recently or failed to get one due to circumstance.

We currently have our mortgage with santander and have held it for 5 years with never missing a payment - would this help us getting a mortgage with the same company again?
 
Similar to yourself, my husband had been SE for just a year the last time we moved (7 years ago), so we couldn't produce 3 years accounts; however because he'd been with his lender so long, we were able to stay with them, albeit paying a slightly higher interest rate than a "regularly employed" borrower. I'd definitely speak to Santander first Joe, just to see how the land lies.
 
good to know!

I wonder if the fact that I can also go back into teaching whenever I need to would help show me as a "less risky" customer?

Its not like I am a potter or a miner with little job prospects,
 
joescrivens said:
good to know!

I wonder if the fact that I can also go back into teaching whenever I need to would help show me as a "less risky" customer?

Its not like I am a potter or a miner with little job prospects,
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I'm pretty sure that is exactly the sort of thing they will still LOVE to hear.
 
i think the goalposts may have been moved considerably from 7 years ago though. It's pretty tough going for lending institutions to actually lend right now... i can't offer any guidance or info apart from some stats a friend of mine told me recently. He has a website which gathers financial leads and then passes them onto lenders... from 4,000 leads in a month he only converts just less than 1% on average. He isn't sourcing leads from desperate people either - there's a good mix, but the criteria are very hard to meet.

I think the LTV is a key part in negotiations and cold hard figures.. not sure if 'going back into teaching whenever i need' will mean anything these days :shrug:
 
leftcurl said:
i think the goalposts may have been moved considerably from 7 years ago though. It's pretty tough going for lending institutions to actually lend right now... i can't offer any guidance or info apart from some stats a friend of mine told me recently. He has a website which gathers financial leads and then passes them onto lenders... from 4,000 leads in a month he only converts just less than 1% on average. He isn't sourcing leads from desperate people either - there's a good mix, but the criteria are very hard to meet.

I think the LTV is a key part in negotiations and cold hard figures.. not sure if 'going back into teaching whenever i need' will mean anything these days :shrug:
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Leigh you're probably right about things changing in 7 years.....christ knows the economy has. :clap:
 
I am sure it differs between different lenders, but when I was looking for my mortgage coming up to two years ago now I seem to remember most requiring that you have a minimum of two years of being self employed in order to be considered.
 
You might also want to look into the possibility of using a broker. I used one for a remortgage recently and as well as having access to products that I couldn't get directly it smoothed the application process considerably.
 
Mortgage lenders don't like the self employed. They much prefer salaried people even though they are likely to be made redundant and have no control over earnings.

Best bet is always with an institution you already have dealings with eg they already have your current account and already know how responsible/irresponsible you are. If you can show years of sensible behaviour then they're more likely to give you a go.

Ideally they'd also want 25% deposit. This opens up more options. The more money you put in the less risk they have so they more likely they'll lend in the first place.
 
leftcurl said:
i think the goalposts may have been moved considerably from 7 years ago though. It's pretty tough going for lending institutions to actually lend right now... i can't offer any guidance or info apart from some stats a friend of mine told me recently. He has a website which gathers financial leads and then passes them onto lenders... from 4,000 leads in a month he only converts just less than 1% on average. He isn't sourcing leads from desperate people either - there's a good mix, but the criteria are very hard to meet.

I think the LTV is a key part in negotiations and cold hard figures.. not sure if 'going back into teaching whenever i need' will mean anything these days :shrug:
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yes things are different, theres a whole mortgage for the self employed category that doesn't even exist now. But when getting a mortgage I would imagine that the lender looks at the profession to assess risk.

Some indisutries are much more secure than others, As a qualified science teacher who can also teach business and ICT I have a lot more job prospects than other more volitile industries for example.

At the end of the day I could alwys get a teaching job again, get the mortgage and then leave the job after a year.

How about part time employed - does this help? Part time employed with self employed business as well. My wife will also be going back to work by the time we are looking to move too so there will be some more security there.

Bottom line is it's going to be totally unfesible to wait 3 years to get the mortgage. House is becoming too small for our family as the kids grow, so I'll have to change my circumstances if needed in order to get the mortgage to happen
 
Would definitely recommend going through a financial adviser. Part time self employed is closer to my situation at the time of taking my mortgage.
Turned out that in my case it worked out best not to mention it and go solely by the employed job. IIRC the reasoning was that in my circumstances, showing that I was reliant on even a small amount of money from self employment worked against me in comparison to being just employed but with a smaller total income.
 
I read someplace you have to have 24 months unbroken employment before you can apply for a mortgage.
 
pepi1967 said:
I read someplace you have to have 24 months unbroken employment before you can apply for a mortgage.
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I have been self employed since I was 18........a long time ago.....I have had 3 mortgages.
 
tiler65 said:
I have been self employed since I was 18........a long time ago.....I have had 3 mortgages.
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No I mean if you go from self employed to employed. I too am self employed and have been for 9yrs and also have mortgages.

But if you stop being self employed they want you to be employed for two years.
 
Buying a house does require a steady income source. But being employed in itself isn't enough to qualify for a mortgage loan. Lenders take into account not only whether you're employed, but also how long you've been employed. Your mortgage loan application will inquire about current and past employers; and as a general rule, getting approved for a home loan requires 24 months of consecutive employment. Gaps in your employment history or a short employment history can prevent a loan approval.

Taken from a mortgage site.
 
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pepi1967 said:
Buying a house does require a steady income source. But being employed in itself isn't enough to qualify for a mortgage loan. Lenders take into account not only whether you're employed, but also how long you've been employed. Your mortgage loan application will inquire about current and past employers; and as a general rule, getting approved for a home loan requires 24 months of consecutive employment. Gaps in your employment history or a short employment history can prevent a loan approval.

Taken from a mortgage site.
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well thats definitely wasnt the case for me.

I got my last mortgage only been in employment for 6 months having gone around the world preceeding it.

it was 5 years ago so things always change, but I would imagine that rule would apply more to first time buyers nowadays if it were a hard and fast rule
 
Can the current house be extended to save the cost of moving at all?
 
joescrivens said:
well thats definitely wasnt the case for me.

I got my last mortgage only been in employment for 6 months having gone around the world preceeding it.

it was 5 years ago so things always change, but I would imagine that rule would apply more to first time buyers nowadays if it were a hard and fast rule
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That's possible joe but with the banks being so tight fisted with giving mortgages out they are taking less and less risks.

Have you thought about the rent to buy scheme.

http://www.homemove.co.uk/forums/best-way-to-get-a-mortgage-3012.html

This is a home move and property forum. No idea if its any good but maybe worth a look.
 
srichards said:
Can the current house be extended to save the cost of moving at all?
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No, is end of terrace with a tiny garden.

The garden is one of the reasons we want to move as well as needing an extra bedroom and to move away from the housing benefit crowd who live just round the other side of the cul de sac.
 
pepi1967 said:
That's possible joe but with the banks being so tight fisted with giving mortgages out they are taking less and less risks.

Have you thought about the rent to buy scheme.

http://www.homemove.co.uk/forums/best-way-to-get-a-mortgage-3012.html

This is a home move and property forum. No idea if its any good but maybe worth a look.
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Cheers.

I do wonder how much of this reputation for banks being "tight fisted" is here say. I know of plenty of people who have moved recently with no issues at all. I think they are just more careful with who they lend to. Good candidates don't seem to have any issues.

The ironc thing is that my self employed state brings in three things the income of when I was employed :lol:
 
Found this on another mortgage site joe. I know it doesn't help you but....


Being self-employed for two years is no issue in regard to obtaining a mortgage. There are now lenders that will consider people who have been self-employed for 12 months, as long as there is a strong track record of employment.
 
pepi1967 said:
Found this on another mortgage site joe. I know it doesn't help you but....


Being self-employed for two years is no issue in regard to obtaining a mortgage. There are now lenders that will consider people who have been self-employed for 12 months, as long as there is a strong track record of employment.
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Cheers. I'll have been self employed for 12 months with a good employment record so hopefully all will be good
 
joescrivens said:
No, is end of terrace with a tiny garden.

The garden is one of the reasons we want to move as well as needing an extra bedroom and to move away from the housing benefit crowd who live just round the other side of the cul de sac.[/QUOTE]

We actually downsized when we moved, but the above is why we moved too :gag:
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joescrivens said:
Cheers. I'll have been self employed for 12 months with a good employment record so hopefully all will be good
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Most mortgages are portable so if your current lender is ok with you being self employed then they may offer something reasonable to keep you as a customer.

There were quite a few small lenders locally too like railway building society, leek united and hanley building society. They might be more flexible than some large faceless bank.
 
I've been self employed (director of ltd company) for about 11 years. First couple of mortgage arrangements were easy as I just did self cert which of course they have stopped now as they are utter madness really.

Last remortgaged 2 years ago when we converted the loft. We used an IFA which helped the application process no end because of being unsure about declaring income when most of it is dividends. He sorted it all and made it pretty stress free.

What helped the most though I think was the equity in the house. As long as they will make some dough if they had to kick you out I'm sure most lenders will be ok. My sister had issues when she came to remortgage because one valuer marked her place down a bit and she had to get it redone.

Do you bank with Santander as well? I'd imagine existing relationship either as current lender, bank or even better both would help no end as well. But I still think their overriding decision maker is amount of loan to value these days.
 
chilluk said:
I've been self employed (director of ltd company) for about 11 years. First couple of mortgage arrangements were easy as I just did self cert which of course they have stopped now as they are utter madness really.

Last remortgaged 2 years ago when we converted the loft. We used an IFA which helped the application process no end because of being unsure about declaring income when most of it is dividends. He sorted it all and made it pretty stress free.

What helped the most though I think was the equity in the house. As long as they will make some dough if they had to kick you out I'm sure most lenders will be ok. My sister had issues when she came to remortgage because one valuer marked her place down a bit and she had to get it redone.

Do you bank with Santander as well? I'd imagine existing relationship either as current lender, bank or even better both would help no end as well. But I still think their overriding decision maker is amount of loan to value these days.
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Yes bank with them too. But also with Barclays. My business account is with Barclays.

Depending on circumstances I could have a higher deposit of 20% but anymore will be a stretch for us.
 
That's how I ended up actually. Well with the woolwich which is Barclays anyway. Got all my banking through them though personal and business.

I would recommend IFA though. It shouldn't cost you anything and its in their interests to get the application through so they should do the heavy lifting.
 
I'm a company director and took out a new Mortgage directly with the Nationwide last year. All they wanted to see was 2 years accounts, but I did have a 30% deposit. All pretty straightforward after they eventually found the application paperwork which they had misplaced :shrug:
 
Sorry Joe you are going to struggle and 15-20% is not a big deposit any more. I'm having the same problems, and i've been self employed for 5 yrs banked with santander the whole time. They can see by looking at my accounts there has been £80-£90k turnover in the business. I also have £30k deposit the offered me £50k mortgage!

I've been searching a long time and the best i've found for self employed is the principality. They're a welsh building society so not sure if they restrict lending to wales you will have to find out. They like to see more than one years but they only look at the last years when calculating how much they will lend you.

I would recommend you put it off until April if you can and get your accounts in early so you have 2yrs accounts to take. Another option is go Limited which is a different ball game all together and easy to get a mortgage, they look at you like an employee.

I'ver now decided, or rather they have decided for me to rent somewhere bigger for a while. I'll be buying cash at this rate!
 
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rjbell said:
Sorry Joe you are going to struggle and 15-20% is not a big deposit any more. I'm having the same problems, and i've been self employed for 5 yrs banked with santander the whole time. They can see by looking at my accounts there has been £80-£90k turnover in the business. I also have £30k deposit the offered me £50k mortgage!

I've been searching a long time and the best i've found for self employed is the principality. They're a welsh building society so not sure if they restrict lending to wales you will have to find out. They like to see more than one years but they only look at the last years when calculating how much they will lend you.

I would recommend you put it off until April if you can and get your accounts in early so you have 2yrs accounts to take. Another option is go Limited which is a different ball game all together and easy to get a mortgage, they look at you like an employee.

I'ver now decided, or rather they have decided for me to rent somewhere bigger for a while. I'll be buying cash at this rate!
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when you say you have banked with santander, have you also had a previous mortgage with them? Or are you a first time buyer?

are there any options to have someone be a guarantor for your mortgage? To make it less risky for the lender?
 
rjbell said:
Sorry Joe you are going to struggle and 15-20% is not a big deposit any more. I'm having the same problems, and i've been self employed for 5 yrs banked with santander the whole time. They can see by looking at my accounts there has been £80-£90k turnover in the business. I also have £30k deposit the offered me £50k mortgage!

I've been searching a long time and the best i've found for self employed is the principality. They're a welsh building society so not sure if they restrict lending to wales you will have to find out. They like to see more than one years but they only look at the last years when calculating how much they will lend you.

I would recommend you put it off until April if you can and get your accounts in early so you have 2yrs accounts to take. Another option is go Limited which is a different ball game all together and easy to get a mortgage, they look at you like an employee.

I'ver now decided, or rather they have decided for me to rent somewhere bigger for a while. I'll be buying cash at this rate!
Click to expand...


May be worth going to an auction and pick up a do up for under 80k
 
joescrivens said:
when you say you have banked with santander, have you also had a previous mortgage with them? Or are you a first time buyer?

are there any options to have someone be a guarantor for your mortgage? To make it less risky for the lender?
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No i have no mortgage with the just my savings and current account. When i went to see them i probably had £35k in different accounts, its a joke. The Principality were much more helpful, they also offered a guarantor product. If a member of your family put there savings in an account with them.

Another problem i've found, i'm not sure if you are in the same boat but my partner does not work, so her and my child are dependants, which massively effect your affordability results.
 
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I'd be very surprised if my current lender wouldn't entertain a new mortgage.

Currently we have a £142,500 mortgage over 40 years with Santander and have had it for 5 years (6 by the time october comes around) during which 18 months of that time I'll have been self employed. Never missing a mortgage payment so will have showed that we can support the mortgage payments.

We'll be looking to borrow £170,000 over 30 years and as such our monthly mortgage payments will only increase by around £150 pounds and this coincides with my daughter starting school and a drop in nursery fees of more than that. Coupled with the evidence my self employment is triple my employment salary should at least make them see us as a very non risky opportunity.

I guess we'll see in october when I have all my ducks in a row.
 
Yeah i'm sure it will be different if you all ready lending from them.
 
rjbell said:
No i have no mortgage with the just my savings and current account. When i went to see them i probably had £35k in different accounts, its a joke. The Principality were much more helpful, they also offered a guarantor product. If a member of your family put there savings in an account with them.

Another problem i've found, i'm not sure if you are in the same boat but my partner does not work, so her and my child are dependants, which massively effect your affordability results.
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I see, I think the rules for first time buyers are totally different because you have no history of showing what you can do you know.

At the moment my wife is in the partnership with me and she'll be getting a part time job when my daughter starts school so she won't be classed as a dependent, she'll be on the mortgage too.
 
So you're basically adding about £30k to the current mortgage?

If it is still within 3x salary then I can't see how they'd be that bothered but ideally you should find somewhere that is a do-er upper or is a repossession. This way you can add value quickly and have the property revalued so it will be on a lower ltv which will make the lender happier.
 
srichards said:
So you're basically adding about £30k to the current mortgage?

If it is still within 3x salary then I can't see how they'd be that bothered but ideally you should find somewhere that is a do-er upper or is a repossession. This way you can add value quickly and have the property revalued so it will be on a lower ltv which will make the lender happier.
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yes pretty much.

Do-er upper might be on the cards but if it were we'd be probably looking at a lower mortgage too. the 170,000 is for a £200,000 with a 30K deposit. We'd want that to be the done deal. A doer upper would be more like a property worth £180,000 with a £160,000 mortgage so that we had £10K to spend on it initially
 
Lots of places around Leek to do up...

100k:

http://www.rightmove.co.uk/property-for-sale/property-37735886.html

125k
http://www.rightmove.co.uk/property-for-sale/property-37780997.html

150k: Zero work needed but a bit pokey room wise

http://www.rightmove.co.uk/property-for-sale/property-30717043.html

Part ex available on this brand new one at £180k which might be a quick solution....

http://www.rightmove.co.uk/new-homes-for-sale/property-24461460.html?premiumA=true

I'd be tempted by the brand new one with a part ex as that means no faffing having to deal with Estate agents, buyers etc. If you arm twist they may pay all fees too...rooms a bit small though so you'd have to be a tidy person.
 
srichards said:
Lots of places around Leek to do up...

100k:

http://www.rightmove.co.uk/property-for-sale/property-37735886.html

125k
http://www.rightmove.co.uk/property-for-sale/property-37780997.html

150k: Zero work needed but a bit pokey room wise

http://www.rightmove.co.uk/property-for-sale/property-30717043.html

Part ex available on this brand new one at £180k which might be a quick solution....

http://www.rightmove.co.uk/new-homes-for-sale/property-24461460.html?premiumA=true

I'd be tempted by the brand new one with a part ex as that means no faffing having to deal with Estate agents, buyers etc. If you arm twist they may pay all fees too...rooms a bit small though so you'd have to be a tidy person.
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none of them are fesible. 4 bedrooms is a necessity and the brand new one is miles away from the west end of leek for school catchments etc. We're also looking for an older property with character rather than a new build. The burton street one is on a main road thats not a nice one to live on, your view is of the industrial estate.

this one is more our sort of thing and its on a lovely street too

http://www.rightmove.co.uk/property-for-sale/property-20490438.html

but a bit of a stretch price wise and a little outside the catchment we want, great for me walking into town for an ale though :)

no point looking now though as we're 8 months away from even entertaining the move
 
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