Looking for a mortgage in my wife’s name as I’m newly self-employed

Sgt_Pepper

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My wife and I have 2 kids, 5 and 1.5, and have been married 2 years, cohabiting for 14 years, and renting for 14 years. She has a steady Public Service job for the last 9 years. 30 hours a week, so not full-time. I'n newly self-employed as of last September (8 months at time of writing).I've been the stay-at-home parent for the last 5 years, but throughout that 5 years, on a weekend night or two, I would have done some casual work to keep us afloat and make ends meet. Obviously we didn't then, and don't now have childcare costs.

We have always lived frugally, and had the advantage of not having any heating bills as I'd cut and source our own timber, service cars, batch cook etc. Prior to me choosing to stay-at-home my earnings would have been 750 a week net. I opted to stay at home as I knew I could go back to work again as self-employed when the time was right, whereas if my wife quit her steady PS job it would have been more problematic regaining employment.

We moved house almost 2 years ago as we needed an extra bedroom with number 2 coming along. That, coupled with the rental crisis, has seen our rent jump from 700pm to 1100 pm. We would have been happy to continue on renting for another 3 or 4 years had prices not risen so much, but now it makes more sense to try and buy. The rapid increase in house prices again has alarmed me somewhat and I'm worried if we don't move on it soon, we could be priced out.

My wife earns 28k Gross, and that comes out at 520 net per week. I returned to self-employment last September and have steadily built up a solid regular income, I'm now earning an average of 1k a week and have been for the last 12 weeks (since January 2017). My accounts will show about 33k earnings on current trajectory. My financial year ends in August 2017. From September to January my earnings were much lower as I was rebuilding up and recontacting my old customer base and getting the work in the diary. Now, I have more than enough to sustain me for 2017 and will earn 1k a week going forward based on current bookings. Next year I would expect hit 1k every week (it could very well hit 60k, 1200 a week).

I understand that central bank rules state I need 2 years accounts before applying for a mortgage. This rules me out of the equation from what I can gather. From what I understand we can apply for 3.5 times my wife's salary. That's about 99k. The service to debt ratio on the other hand, could be our downfall.

We (I) started to save in January for a deposit. 12 weeks in I'm up to 5k and my wife is paying down a credit union loan which I've now started contributing to which has doubled her own agreed repayments, with the intention of having it paid off in June. She already paid a lump sum of 2.5k off it 5 or 6 weeks ago so she's well ahead of agreed repayments as is and we are hoping this will stand to us somewhat. By the end of June , on current trajectory and 6 months after we knuckled down, her last loan payment will be made and I should have the deposit needed (about 10K). That also gives us 6 months of decent accounts, Jan-June, needed to approach lenders, if indeed, there's any point.

At that point, end of June, she can then start saving too at a rate of 750pm. Im saving about 1200pm and rent is 1100pm. I have no outstanding loans. On weekly basis I also send about 100 a week to an account I opened with the sole purpose of keeping my tax returns out of my way.

I did have some loans before and during the crash, and paid them off on time. However, I wrote to the ICB a few weeks ago to check my credit score in advance and they found no trace of me on their system so my loans from that period were never registered by the Credit Union. I've had no loans taken out, or active, in about 6 or 7 years.

We also checked the ICB for my wife's credit report and her loans were registered and her score is in good order, and as we expected. She had a loan for our wedding, topped up for a trailer tent, and her car.

So, although we are in a relatively good financial position now, I fear we are in a hopeless one until I get two years returns in a year and half's time. By then we'd have a healthy deposit of about 35k-40k.

So why this post? Well, we have spotted a 3 bed house in a perfect location for 130k. It has been on the market for quite some time and although needs a lot of work, is actually almost habitable as is. It needs electrics, and a heating system. The auctioneer told me they accepted an offer of 123k but it fell through afterwards.

Would we be wasting my time approaching a bank in early July with 6 months bank statements, deposit, and trying to borrow 110k over 15 years (700pm repayments) in my wife's name? I was hoping to use my income to renovate the house in question, room by room, as there's not that much required to make it habitable. Electrics are the pressing problem and I would reckon about 4k, which I could borrow from family or raise myself , would be the only issue rendering the house uninhabitable short-term.

To finish, we had originally intended to wait the two years until I had my accounts, but this house is perfect for our needs. We are also adamant that we would no want a mortgage in excess of about 150k anyway as we intend to buy a site and build in 4 or 5 years. So If we did buy this house it would be to live in, to stop paying rent, flip it when or if the time came in about 5 years. and even if something unforeseen happened re health or another crash, we'd be happy to live in it anyway as it would fulfil our needs. We both feel it's a great opportunity and stepping stone.

Due to my wife's job she's a member of a staff Credit Union who have in the last year or so, started to give out mortgages, we were going to approach them as she's with them for 9 years, I've also joined last few months and now save with them too since January. However, we rang them a few weeks ago to have a discussion, a sounding out, about the prospect of a a mortgage. They seemed genuinely interested and open in communications and indicated we could borrow in my wife's name, only to ring us back days later and tell us they'd already hit their 15% limit of their loan book for mortgages. It seems the new FTB grant caused a flurry of applications and we missed the boat. That's why I'm asking if we should approach other lenders this year, or just sit tight for 1.5 years and watch prices rise up to 10%, while saving?

The Credit union told us they're appealing the decision to the Central bank rules and we are on a list of people they'd contact if successful in their endeavours.

It should be noted that now that I'm back to work again, we still have no childcare costs as I only work weekends while my wife stays at home, and I take over again Monday morning and stay at home for the week while she works.

Any relevant advice welcome and appreciated, and thanks for reading this long winded post.
 
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Appropriately enough, your best chance of getting a loan is from https://www.peppermoney.ie/

Get onto one of the mortgage brokers which represent them.

To buy a house for €123k, you will need a €12k deposit and maybe another €10k for legal fees, moving and the basic electrics.

So you need €22k.

It seems that you have €5k in cash and some amount outstanding on a loan.


We (I) started to save in January for a deposit. 12 weeks in I'm up to 5k and my wife is paying down a credit union loan which I've now started contributing to, with the intention of having it paid off in June. This will take about 6 months of her original loan duration. By the end of June , on current trajectory and 6 months after we knuckled down, her last loan payment will be made and I should have the deposit needed (about 10K).

Why don't you just pay off the Credit Union loan in full now and save yourself the interest? There is no point in waiting until June.

By the end of June, you will have €10k and will have cleared your loans, so you are still €12k short. Can your family gift that to you?

My financial year ends in August 2017. From September to January my earnings were much lower as I was rebuilding up and recontacting my old customer base and getting the work in the diary. Now, I have more than enough to sustain me for 2017 and will earn 1k a week going forward based on current bookings. Next year I would expect hit 1k every week (it could very well hit 60k, 1200 a week).

Would you consider changing your year end to December? That would put most of the low earnings months into "last year's" accounts.

You could show the lender management accounts from January which would be much healthier.

Talk to your accountant about the validity of this.

Don't forget that if you are self employed and earning €60,000 a year, you will have a big tax bill in October. You say you are earning €1,000 a month now. That will be a lot less after tax - probably around €700 a month.
Brendan
 
Thanks for reply. Yes, my family could gift us the 12k. My wife felt it would look better when applying for a mortgage to show that we were saving while paying off CU loan. I had wanted to clear it myself too, but she convinced me the interest was pretty minimal at this closing stage and we should let it run its course.

Interesting point on shifting my tax year, I'll investigate.

I had figured having a slow start between September and January would benefit me as by the end of the year I'd be under or hovering around the lower tax threshold and, importantly, also under the VAT threshold. If I had to start charging VAT anytime too soon, it would hurt me in my line of work - at least for the near future. I was hoping to move toward that in good time.

Thanks for link and tips.
 
I had figured having a slow start between September and January would benefit me as by the end of the year I'd be under or hovering around the lower tax threshold and, importantly, also under the VAT threshold.

Those two points would probably outweigh any uncertain benefit of a December year end. But do check it with your accountant.

I don't think that having a loan is a good idea. Pay it off.

Brendan
 
Are you sure you have been correctly advised about Vat?
My understanding is turnover (not profit) of €37,500 for the year for the provision of services ,or €75,000 for supplying goods means you MUST register for Vat.
If you are clearing €1k a week,you must be over the vat thresholds,unless you enjoy some extraordinary margins on supplied goods.
My understanding is that you could be accruing a vat bill of 200 or more a week,as you should know based on forward work that you should be registered .
 
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Are you sure you have been correctly advised about Vat?

Yes, I believe so. I registered via my accountant in Septmeber 2016 (I was waiting for my 5 year old to start school for the first time so I'd have some time free to get myself back up and running). He advised me on the VAT threshold and recommended I try to stay below it as I had told him if I had to charge VAT I would be unable to compete in my line of work until I got re-established.

Therefore, I did very little for the first few months - Sep-Dec. So my earnings for the first few months were minimal. Maybe 200 maximum per week, other weeks nothing at all. I did pick up additional work around Xmas, but it was short notice kinda stuff, and covering for other people who got sick. Even if I had wanted to and tried to, I wouldn't have been able to build it up that fast anyway. In my line of work our customers book ahead for the entire year and do so in around September/Oct/Nov. If you miss the boat, you're only left with scraps until the following Sept. Those booking take effect in January and go right through to Dec. So, each of my customers have booked me once a month, or once every 6 weeks from JAnuary - dec. It's repeat business.

So as I didn't have much on between Sept-Dec I should end up around 33k when the year is taken as a whole.

I provide a service and not goods, so my VAT threshold is 37k. The following year, I'll breach it. But not this year. I've been putting aside about 100 a week for revenue. I have very little expense outside of petrol and the cost of the tools of the 'trade' which are long bought and paid for. Hope this clears it up somewhat.
 
From Revenue's guide to VAT
'...registration is obligatory where certain turnover thresholds are exceeded or are likely to be exceeded in any twelve-month period...'
Taking the 12 months from Jan 1st,with visibility on future work,do you think you will exceed €37,500?
If so,you are obliged to register.
 
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