Self employed mortgage

[PrincessWatermelon]

I wonder if anyone can help.

DH and I are looking to take on a larger mortgage with a new house, where we plan on stretching ourselves.

He is employed, so that's easy. I'm self-employed and have been told I need 3 years accounts. I'll have that come April this year. However my first year of accounts was much smaller than year 2 &3. It's only a third of the amount as I was just back from maternity and building up my hours.

My question is - if the calculation is 4.5 x income, is that the average of my 3 years or if there's evidence of Y2 & 3 being good, could i borrow more?

Thanks

Why do you think it would be 4.5 x income?
Who prepared the accounts?
How are you self employed? Ltd company?

I'm not sure but we are both self-Employed, and have had three mortgages - all via a broker. She was able to speak to the providers on an actual real life phone number (I know!) and also get approval in principle before officially applying.

This is essential because you sure as hell don't want to be turned down for a mortgage - and a good broker will find the providers who are more 'case by case' than a high street bank.

You shouldn't have to pay up front for a broker and they will get you a better deal anyway (and it's less stressful)

Completely agree about getting a broker if you’re self employed. Our broker knew who to approach and we received an offer very quickly.

Good luck

We are going to use a broker or a mortgage advisor, thanks.

We have received confirmation that 4.5x income is standard.

But in terms of looking at properties and deciding the possible money we have available, I'm wondering if it is based on the average of my 3 years earnings.

I thought it was all affordability these days, rather than income multiples

They're more concerned if the figures from the latest year are low, rather than those from 3 years ago, I've found.

Use a specialist broker for self-employed who has arranged non-standard underwriting methods with some insurers.

There are several. Google something like "contractor mortgages uk".

We've had brilliant deals over the years.

Thanks. It doesn't sound like there's a fixed rule then! Makes it harder when searching on RightMove. As I say, I haven't completed this last tax year, so we can't move forward with in principle agreements yet. But you know how it is - always wanting to have an ideal browse and see what's available.

I hope you're right @Svalberg. That's what I'm hoping. There's good reason why Y1 was low and why Y2&3 are now going to be the norm.

They tend to go on the most recent year. I only had to provide two years with Santander, not through a broker.

Hey, I am actually a mortgage underwriter for a high Street bank. Typically my bank asks for the last 2 years accounts and we look at the Turnover and profits from what is entitled as your share. We take an average of the last 2 years profits along with your directors salary so would be best to also provide your last 2 years p60s too so they are not penalising any income you do receive. Ps. Also provide any extra information as to why you've suddenly increased in business performance. Hope that helps.

We got 4.5x Husband employed and me self employed. They took the average over the 3 years from mine.

Thanks @ch3y. Mine is very simple - I work in as a locum, so self employed, although have pretty set days I work. Hence it being predictable to remain as it is now. No directors salary or shares or what have you! When we speak to the broker, I will explain why Y1 is low and that Y2 & 3 are now typical, in case that can make a difference.

@fabadababadoodee - that's what I wonder is going to happen...