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Any other self employed fellas on here who have got their first mortgage recently with any gems of advice?
I'm looking at a £155k property with a £20k deposit... all looks to be fine on the online calculators ect but I'm worried about how many years of books I'll need and how "written up" they'd like them. I've obviously got my end of year returns showing what was profit and what I paid in tax... but do I really need an accountant to write up the rest? seems a bit counter intuitive that I'd need more than the government needs to assess my business?
Thanks
You dont have a guaranteed income every week like me, people working in a job for an employer do.
Mate is in the same situation and i was many years ago
£ years books for me, my mortgage advisor and lender were happy with the Unaudited accounts from my accountant.
I used a broker to get mine, been a self employed contractor for years and had no problems. The broker takes his fee from the mortgage company and the deal he got us was better than most I could get going direct and was no different from what a permenantly employed person would have been offered.
The only extra charges I had were from my accountant who had to submit info to the lender.
Oh yeah and they'll ask for the last three years worth of sa302 forms which you need to get from hmrc, which can take awhile
Three years accounts at least or they won't even talk to you I found, and even though I was remortgaging for about £15k left on the mortgage at the time they were not keen on lending. Also had to pay accountants for a statement saying I was basically worth lending to.
There are specialist self employed / contractor etc companies about though. I've not looked into them yet but probably will if I finally get round to a house move.
It's been tightened up in the last few years, worth asking your bank first - and then maybe an expert-mortgage consultant.
Scottish widows are doing self employed mortgages with great rates at the moment. Give them a go.
During this calendar year all my sole trader clients have been asked for their last three years prepared accounts and corresponding SA302's from HMRC. Clients who have shown a bad year within those provided have also been asked for management accounts for the current year.
You need to call HMRC and request your SA302's and they take around 10-14 days to arrive so you may as well get them before they're requested.
Thanks guys - and thanks for the insight Craig... I don't have an accountant as my books are easy to keep... do you recommend I find one now so I get a more "official" looking presentation?
Cheers
SA302 is spot on, for me I ended having to pay more tax. I keep a little extra in my limited company for a rainy day. Its better to keep it there as if you take it out you pay more tax.
But, as I need to show a decent amount of earnings I had to take more out and pay more tax. I paid myself and my wife more and we both had more earnings in the 40% tax bracket. (we paid us a bonus 🙂 )
They asked my accountant to fill out a form, this sort of just asked them what the earning predictions were.
I went via a broker and the fees were very small, the broker knew the my accountant so it made things run very smooth (HMRC were slow), the broker also worked close with the mortgage team so any niggles were sorted.
I would recommended a broker but I would ask you accountant if he/she works with any.
Even with all the above, it was a proper pain with the HMRC as they are not setup to be involved in the process. We had to get tax returns submitted and then get a SA302 days after, we had to phone the HMRC and ask them nicely to FAX over the SA302.
Thanks guys - and thanks for the insight Craig... I don't have an accountant as my books are easy to keep... do you recommend I find one now so I get a more "official" looking presentation?
It's not the presentation but the fact they have been prepared by a professional so assumed to be "true and fair"
Whereabouts are you Alex?
I'm back on PAYE now but I was a contractor when we got our first mortgage. Like a few folk above, all I needed was three years worth of SA302s. My tax affairs are very simple though.
I too went through a broker. That would be my first port of call in your circumstances.
Three years accounts at least or they won't even talk to you
i managed with 2 as one particular year wasn’t helping much and the year that had ended but not been made up was down due to big once in 10 year expenses going out and big invoices unpaid (so an increase in work and income but down on paper) i had a sizeable deposit and a reasonable LTV over under 70% and even with a broker it was a struggle but got there in the end.
payments compared to income were very low (1/6th) yet a salaried person on a lower income than me would probably breeze a 90% mortgage on a way hire income multiple. my 65k deposit wasn’t enough and at the last minute they dropped the lending amount by another 4k 👿 for no reason?? valuation was fine and the amount made no difference to the mortgage product or shifted me a LTV step so made no sense.
TL/DR banks dont like the self employed, get a good broker, the few hundred pounds you pay them is worth every penny.
I used contractor money - they went on current contract value & 2 years accounts.
Don't know what business you're in but definitely agree a specialist broker is worth it.
Last 3 years SA302's and some lenders also now ask for the same 3 years TYO Tax Year Overview and last 3 months business and personal bank statements
Contractormortgagesdirect we're helpful
Based in Cumbria Hammy, I'm looking into brokers now... should probably find an accountant too!