Getting a mortgage when self employed

Hi there

I currently live in a house in town and want to move out a bit.

I've found a house that is costing 350000 including the stamp duty

I was left 350000 in a will and so have the full purchase price of the house

my current house is valued at about 200k and I have a mortgage of 280k

I will be renting out the old house for about 1200 per month ( which is just over what the mortgage is)

The new house needs about 100k of work done on it to bring it up to scratch

I am self employed and my accounts show drawings of only 40k. My wife is out of work at the moment.

We all know that drawings are not the true amount of salary as being self employed i am able to claim for certain things.

However a friend did a 'run by' on the mortgage and I got turned down.

Does anyone have any advice that would enable me to get the mortgage.

I have no other debts other than the mortgage and ICB credit checks have no problems on them.

Thanks in advance

Jimmy

my partner and i couldn't get mortgage coz he was self employed (construction industry though) even though we'd be actually able to afford our mortgage on the dole....

i don't know....I know its lovely to have a bigger house etc...but would u not just be happy with paying back your mortgage and doing some work on the current house? instead of being owing €100,000 + €280,000 to the bank...

I think i'd rather a nice holiday every year than 2 extra ensuite bedrooms etc....

Best of luck with it anyways....

HI daisy,

I know what you mean but I live in a less than celubrious part of town, which, although great for a young couple, is not very good for bringing up kids. It's also too small and extending isn't an option.

If I can't get the mortgage, I am going to have to do up the new place on the back of earnings, which will take longer but, ho hum....

Maybe in 30 years time the banks will be confident enough to re-introduce self certified mortgages, or something to cover self employed.

Long gone are the days when the self-employed earned much more and paid less tax than the PAYE worker.

how much are you trying to borrow? what will the funds be used for (renovations??)?

as regards your income for the affordability calc, usually take net profit and add back depreciation, one of losses, maybe a small % of motor and expenses or subsistence...

will prob assume that you can't rent the other property so you'll have to be able to repay both mortgages

Hi Kildon,

I am trying to borrow around €100,000. The funds will be used to make the property liveable as it has been vacant for a number of years and needs a fair bit of work, most of which I will be able to do myself.

Was talking to a bank today and they said that to keep the first house (i.e. rent it out) it would become an investment property and so would need to be 50% LTV. This means that I would need to pay back €180,000 to be allowed to borrow €100,000 from them. Which doesn't make an awful lot of sense in my case!

shop around for the mortgage...not all banks will require you to reduce the LTV to 50% on the rental property, they might look at the average LTV of both properties...you really need to be able to prove you can pay the two mortgages...a good broker might be able to help you