To think someone should give me a mortgage

[quittinaeete]

Own my own house outright but want to move to a slightly more expensive one.

Will be a tiny mortgage but I can't get anyone to lend to me as self employed. The first two years I made nothing but now making good money. But because the average over three years is under 12k no one will lend to me.

The mortgage will be just under 200 a month on a five year fixed and I would save enough to pay it off outright after the fix. Even if I did nmw work could easily cover the mortgage. Yet I know people on a lower income that have a string of interest only buy to lets and get mortgages without much Hassel.

@ArgyMargy

Literally everyone where I work.

If you work in any kind of IT environment it's the normal term for employed vs contractor. It's contractor or permie. I hate it but it's the normal term.

Yup, L&C recommended by everyone also couldn't get me a mortgage.

@argymargy

I assumed this was a typo & was meant to be ‘permie’.

(it's 'permie', not 'pemie')

How is it £200 per month for 5 years if you are borrowing 25k?even with 0% interest that’s only 12k. Isn’t it? My maths is notoriously poor so apologies if I’ve missed something really obvious.

Unfortunately, since the 2008 crash, the world has gone mad.

We used to have such things as non status mortgages. If you were borrowing just a small amount and had an LTV ratio of under 60%, they didn't care less about your earnings. There is no risk to the bank. If you don't pay, the house is sold, and the bank get their x% of the proceeds back, the amount they are owed.

Today, there is still no risk to the bank. If your borrowing £25K on a £250K house, where's the risk?. The bank are going to get their money back whatever happens.

But crackpot FCA "sledgehammer to crack a nut" rules means banks are not allowed to loan money to people who may not be able to pay it back. If you are unemployed, the bank can't lend you £10K to buy a £1m house, even if you are using £990K of your own money to fund the rest.

Because to much emphasis has been put on consumer rights, if they lend you £10K to buy a £1m house, and you can't afford the repay it, you can complain that you were given a loan you couldn't afford to repay by the unscrupulous bank, and not only will you not have to repay the £10K, you'll probably get awarded £20K for the stress they caused you.

As I said, the world has gone mad.

It's not the risk of losing the money the bank are scared of, it's the risk of you suing them for giving you the loan in the first place.

Have you got savings? If not they may think you haven't got disposable income. Try saving for few months and go back. I paid my deposit on no interest credit card because an investment was slow to be cashed in.

Look at your credit rating and clear any problems there too.

@cardibach

The mortgage is for fifteen years, only the fix is five years.

@Missingstreetlife

I had savings worth 3x what I wanted to borrow. Made diddly squat difference. Hence giving up and using my savings to buy.

So you earnt £36K in 3 years. So the maximum income is £36K pa, if the business made no money in 2 years.

What you want to do doesn't make much sense. You want to borrow using a long term repayment vehicle, a mortgage, but repay in a short time? The amount you want to borrow isn't large and so on.

You need some financial advice in general

It's a typo for "permie" which is short for "permanent". Not so weird and way-out (unlike the lenders' policy on self-employment, it would seem).

Wow some people get so het up over a letter missing typo from an industry standard word!

Lemon if you read my posts you would see it makes perfect financial sense to have a 15 year mortgage to be safe and low risk but aim to pay it back after 5.

Yes I might just have to get a normal loan, 25k and a few months of savings will get me enough depending on the next house.

Only have a few k in savings, but this will increase by 2k every month from now on.

Will try brokers and speaking to bank. It's all just a bit silly, they should be biting my hand off seeing how much I made in the last year and how little I want to borrow as it's such a tiny risk. Wouldn't mind a higher than normal fee or rate. But maybe as someone said it's too small and they just aren't interested

What you want to do doesn't make much sense. You want to borrow using a long term repayment vehicle, a mortgage, but repay in a short time? The amount you want to borrow isn't large and so on.

A mortgage is just a property-secured loan in a smart suit. It's traditionally seen just as a half-a-working-lifetime thing. But you can use them more cleverly than just that. No-fee fixed term deals are currently

Try Trussle mortgage brokers OP. We’ve just used them as DH self employed on pretty low wage. They’re recommended on Martin Lewis site, and are free to use as they get their commission from the bank following completion. They’ve been absolutely brilliant for us and I would totally recommend them.

Borrowing over 15 years at a low interest rate can and usually does cost more than a short term loan at a higher rate. It’s why you shouldn’t add debt to your mortgage no matter how low the repayments seem compared to other forms of borrowing.

The OPs recent earning history is very risky so unless she has a solid history of borrowing and repayment then a bank is going to be skittish. She needs to get in front of a good adviser and broker.

Sorry but it goes with the territory of being self employed. It sucks but surely you knew this? We are waiting for our 2 years limited company to be up so that we can get a mortgage.

Exactly dog. Funny how someone saying I'm financially illiterate just shows themselves up!

Princess but I'm not high risk at all, that's the whole point. Good income, little outgoings and high equality. Even in the very unlikely event no more work came in (I'm under contract for a while so very unlikely) I could get any job and still afford the £200 a month. It's more my position isn't normal.

Argy; I’ve heard quite a few people refer to permies (not a term I’d use myself, but it’s definitely used)

We are waiting for our 2 years limited company to be up so that we can get a mortgage.

Daft that isn't it Ltd you within reason run up large levels of debt the firm can go bust suppliers won't get paid etc etc.

Yep self employed your open to several liabilities and are self resonsible for them..

But you can't get a mortage being self employed?

It's daft the amount of times someone is allowed to run up debts close their limited company, then a few weeks later open up the same buisness with a slightly different name

Have you spoken to Accord mortgages? They do "risky" clients.
They are subsidiary of Yorkshire building society and I have to say I had no problem with them. Actually the oposit. Getting new fix was the easiest thing ever.

@OftenHangry

But are you self-employed do you have less than three years of business accounts? And was this a brand new mortgage taken out in the last two years?

If not, it's irrelevant who you found was happy to give you a mortgage, they will not give a mortgage to the OP.

I don't think going into a bank branch will help, bank branch staff have no leeway at all. In fact, brokers have more leeway and are more likely to be able to talk directly to the underwriters at the bank. Bank branches do so few mortgages that they are not really considered an important revenue stream, unlike brokers who are.

It would be really interesting to hear from anyone who has been given a mortgage in the last two years without at least two, but more likely at least three, years of audited business account showing consistent income.

I had £50k pa+ income, and needed £50k, I had over £100k in savings. I was in an employed role (but on a fixed term) and had business accounts showing income for six years, but because I went contract-employed-contract-employed, I never had three clear years of any one thing. And that was the reason no bank would give me a mortgage, and I tried three brokers, two of which everyone said were the best for self-employed people. This was also since the Brexit vote, but now we're nearer D-day banks really are drawing away from risk.

It was just over 2 years ago. After the vote. No, I wasn't self employed, but I was taking 95% mortgage just by myself and when I was talking with the broker after she recommended these, she mentioned they are more friendly than some others when it comes to self employed and "risky" clients. Used to be just through brokers, recently they changed so customers can reach them directly. Plus I am not British, which became extra risk for the lenders after the vote (apparently).

I absolutely understand how difficult it is for self employed to get mortgage. I was self employed year before that and tried to look into mortgages. Damn, they are tough.
It never hurts to speak to them though.

Personal Secured Loan?

Argy. I work in IT as a contractor and permie is always how permanent members of staff are referred to if the difference comes up.