Getting a mortgage as a self employed person

[Thora]

Has anyone done this recently? I have never bought a house or had a mortgage before and don’t know what I’m doing.

I’m just finishing my 3rd year of trading - this will be my 3rd tax return on 31st March.

I have an agreement in principle from my bank based on my first two tax returns, but my first year profits were low so the offer is low. Is there some way of getting the mortgage based on a projection of this year’s/future years profits?

Are some lenders likely to be better for self employed people? Should I use a broker?

 

[danski]

Cheap Mortgage Finding

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I’ve done it twice through L and C, recommended above.
You’ll need some stuff from Hmrc. SA30 I think. They explain. It’s all straightforward.
Good luck.

eta...not sure about projecting forward though.

 

[Thora]

Thanks - the SA30 is the tax return isn't it? This year's income will be double my first years income so ideally I'd like a mortgage based on now rather than then.

Does anyone know roughly how long the process is between putting in an offer and actually having to apply for the mortgage? If I view somewhere today, could I wait til after doing my tax return at the end of March to actually apply for the mortgage or will I need it in place before that?

 

[danski]

Thanks - the SA30 is the tax return isn't it? This year's income will be double my first years income so ideally I'd like a mortgage based on now rather than then.

Does anyone know roughly how long the process is between putting in an offer and actually having to apply for the mortgage? If I view somewhere today, could I wait til after doing my tax return at the end of March to actually apply for the mortgage or will I need it in place before that?

Sorry, it's the SA302 Tax Statement.

 

[Epona]

Thanks - the SA30 is the tax return isn't it? This year's income will be double my first years income so ideally I'd like a mortgage based on now rather than then.

Does anyone know roughly how long the process is between putting in an offer and actually having to apply for the mortgage? If I view somewhere today, could I wait til after doing my tax return at the end of March to actually apply for the mortgage or will I need it in place before that?

You should get approval for a mortgage before viewing anywhere, you can't make an offer really until you have your finances in place (I doubt any vendor is going to accept an offer conditionally and wait until the end of March to find out whether you can finance the purchase), so viewing before that is just a waste of time.

 

[Thora]

An actual mortgage application or an agreement in principle?

 

[Epona]

An actual mortgage application or an agreement in principle?

Agreement in principle that you can borrow up to x amount Then actual application asap when you start the process of buying somewhere.

(It would be unlikely that a delay from now until the end of March for you to start to apply for a mortgage would be acceptable to all vendors though, some will go for a quicker/easier sale to someone who has funds ready if they can).

 

[Thora]

I have an agreement in principle. Actually I have two, one based on my previous two tax returns and one based on this years income and last years, there's £30k difference in the mortgage amount though. I can't prove my 2020-21 income until end of March.

 

[bellaozzydog]

Has anyone done this recently? I have never bought a house or had a mortgage before and don’t know what I’m doing.

I’m just finishing my 3rd year of trading - this will be my 3rd tax return on 31st March.

I have an agreement in principle from my bank based on my first two tax returns, but my first year profits were low so the offer is low. Is there some way of getting the mortgage based on a projection of this year’s/future years profits?

Are some lenders likely to be better for self employed people? Should I use a broker?

I’m self employed and took a year off and one of my tax years (3rd) was a bit thinner than the following two as I went back to work half way through the tax year

my accountant suggested I forward to the next years tax and do my return early

It gave me a different set of figure to use abrought my average income up to what it should be and gave me a more recognisable “affordability” factor for mortgages

having said that I’m on a unicorn tax code and been with my accountant for 18 years

So “chat with your accountant” is probably best advice

Good luck

 

[Epona]

Aye the issue is that if you view somewhere now and put in an offer, there are likely to be other people who can complete before you can prove your income - and vendors will sell to someone who can complete quicker, they aren't selling their home because they want to stay there for another few months - so why disappoint yourself and vendors by viewing places if you aren't in a position to apply for a mortgage right away - no-one is going to want to sit around for 6 weeks between accepting an offer and waiting for your mortgage to be sorted. I'd start viewing places more towards the end of March if I were you.

 

[bellaozzydog]

Thanks - the SA30 is the tax return isn't it? This year's income will be double my first years income so ideally I'd like a mortgage based on now rather than then.

Does anyone know roughly how long the process is between putting in an offer and actually having to apply for the mortgage? If I view somewhere today, could I wait til after doing my tax return at the end of March to actually apply for the mortgage or will I need it in place before that?

I’d be looking to rectify the finances and then you know where you are at and can confidently look for a property within your range confident you can put an offer in and get it

five-ten years down the line you’ll regret not spending a wee bit more time getting your range of mortgage widened and getting the house you want rather than a compromise

took me and the accountant about a week to turn round another set of books

 

[Thora]

I don't have an accountant

It's a particular property I'm looking at, it kind of has to be this one and now.

 

[bellaozzydog]

I don't have an accountant

It's a particular property I'm looking at, it kind of has to be this one and now.

I don't have an accountant

It's a particular property I'm looking at, it kind of has to be this one and now.
[/QUOTE]

If you have an AIP for the required figure, plus the deposit, plus cash for the stamp and solicitors bang an offer in now then!

Honestly the whole process goes glacially slowly
While seemingly being high pressured and fast and furious

 

[Thora]

Going to view it later

 

[sheothebudworths]

Thora - do you get Tax Credits?

If so, some - but not ALL - lenders will allow those as income, too (also child benefit) and your children are all relatively young - it may make a significant difference to what they will lend.

As danski said, give L&C a call, definitely.

I had an extremely difficult set of circumstances and literally trawled through all the individual lender eligibility requirements (using their info for brokers) - and L&C still came up with the best I'd found, as applied to my situation, with the lowest rates etc.

DO NOT get any more mortgage in principle offers until you have done that either (I can't really remember why that is important - just that it is! Something to do with too many recent checks on your credit history, I think!).

Contact London & Country Mortgages - L&C Mortgages

We're the UK's largest Fee-Free Mortgage Broker & Adviser, with offices in Bath, London & Newcastle. Contact us today. Open 7 days.

www.landc.co.uk

 

[sheothebudworths]

Given that UC has replaced 'in work' bens, it might be that that's considered, too, in place of Tax Credits - I will look if it's helpful.

Equally though - as danski alludes to, some lenders are more open/will lend more/have different requirements to others. It's not the case that one lender saying no means no - so you really would be best off getting proper advice and L&C is free (and free, not 'free').

 

[sheothebudworths]

As an example - Nationwides lending criteria (they were who I went with because of including bens - and in work UC would be counted) -

Income lending criteria | Nationwide for Intermediaries (NFI)

Read more about the different types of income we accept and the proofs required. Find out more about affordability, lending into retirement, furlough and additional properties.

www.nationwide-intermediary.co.uk

More detail on self-employment -

Employment criteria | Nationwide for Intermediaries

Read more about our lending criteria concerning your clients employment type, including self-employed, fixed term contracts and new jobs.

www.nationwide-intermediary.co.uk

ETA - I also recall that re the bens, some lenders would only count a percentage, some all, some none. I can only guess there may be similar variations re self-employment, too.

TL;DR - CALL L&C

 

[Epona]

I didn't realise it was a particular place you were after that is available right now rather than a general house hunt - best of luck with it

 

[Thora]

Thanks sheothebudworths , no tax credits/UC anymore as we don't pay for childcare (and have an illegal 3rd child anyway )
The AIP from my bank said it wouldn't impact on credit rating so hope that is the case

It's a slightly complex situation as we would be buying it 50/50 with my parents, so still have to see how that would work. They have their half in cash. I have at the moment just over 10% of my half in cash and need a mortgage for the rest.

 

[sheothebudworths]

Thanks sheothebudworths , no tax credits/UC anymore as we don't pay for childcare (and have an illegal 3rd child anyway )
The AIP from my bank said it wouldn't impact on credit rating so hope that is the case

It's a slightly complex situation as we would be buying it 50/50 with my parents, so still have to see how that would work. They have their half in cash. I have at the moment just over 10% of my half in cash and need a mortgage for the rest.

Ok - I would still say you should absolutely start by calling L&C next. It sounds like a pretty good position that you're in and one I'd guess they would be good at directing you through (I think they're almost better for the less standard positions)!

ETA - don't dismiss child benefit as additional income though. Did the lender who gave you the AIP include that? Don't imagine your own bank is the best, btw (it may happen to be but is most likely not) - you get fuck all credit points for having stuck with one bank for years.

 

[Thora]

I will call L&C next. My cousin also bought a house recently and recommended Habito, has anyone used them?

I didn't include the child benefit but actually I think it comes to about £2.5k a year so a fair amount.

 

[sheothebudworths]

Cheap Mortgage Finding

If you want the best mortgage, search mortgage comparisons, then use a mortgage broker. Find out how to search the market for your top rate.

www.moneysavingexpert.com

Try both!

 

[Thora]

My mum's decided she's going to make an offer tomorrow so I better get on with it

 

[hash tag]

I don't know enough about your circumstances, but if all else fails, you might want to take a look at non status/sub prime mortgages, maybe through a broker. Please think very carefully before you go down this route. You will pay a higher interest rate is just one consideration.

 

[Red Cat]

Exciting Thora !