Getting a mortgage when self-employed

[LisaV]

I'm self-employed and have been for a year now.
I didn't earn much at all until last month. Now I'm getting a steady income of £1,000 per month from two businesses.

We will be looking to get a mortgage and I wondered how the banks would now rate me - would they take my wages into consideration?

I know some of you have advised me not to look into buying until next year at least, but I am now desperate to get out of this area and move somewhere safe for my kids. Just last Wednesday I was threatened in the school playground by a mother in front of my 6 year old. She threw a football into my chest and warned that she would 'get me'. She has previous. This was because I had told her teenage son not to play football near young tots with their mums - the ball had already hit one mum.

The week before that I was with my daughter when we came across a very large burly man with a huge dog who was threatening to beat a teenager up half his size. I stopped and asked the teenager if he was ok, I was told to f off by the man (who towered over me) or he'd start on me.

This is now a common occurence and I am just very very desperate to move. We are privately renting, I wouldn't want to go on any social housing list around here. Average house prices are £170,000 for a 3 bed in a niceish area. My husband earns £17,000pa, but we have a £50,000 deposit. So I really need to know if my earnings can be taken into consideration to get enough of a mortgage.

Any advice appreciated.

 

[Billmccallum]

Look for a local Mortgage Broker who can search the whole market for you.

Some offers include 4.5x multiples of earnings for First Time Buyers.

With a large deposit you should have no trouble finding something.

 

[Ali-v-8]

I would give you one bit of advice.

Your income doesn't (imo) cover your mortgage.
The only one who would give you a mortgage is some one who would like to repossess the house and sell it with at least 50k profit.

I applaud you for trying to get onto the property ladder, but I would be patient and make sure that YOUR income is solidified for at least 12 months.

These are harsh times that are about to get worse and I myself am holding off buying another house till after Christmas. Then property will be here there and everywhere.

Renting is the best solution.

As for the scumbags there is only one solution. Video and police. Record the crime, group up with the other mums who also have a problem. Its not just your problem. It probably effects everyone who goes to that school.

I had the same problem at my sons school. Unfortunately for them i am not a very tolorant person where my kids are concerned.

I'm self-employed and have been for a year now.
I didn't earn much at all until last month. Now I'm getting a steady income of £1,000 per month from two businesses.

We will be looking to get a mortgage and I wondered how the banks would now rate me - would they take my wages into consideration?

I know some of you have advised me not to look into buying until next year at least, but I am now desperate to get out of this area and move somewhere safe for my kids. Just last Wednesday I was threatened in the school playground by a mother in front of my 6 year old. She threw a football into my chest and warned that she would 'get me'. She has previous. This was because I had told her teenage son not to play football near young tots with their mums - the ball had already hit one mum.

The week before that I was with my daughter when we came across a very large burly man with a huge dog who was threatening to beat a teenager up half his size. I stopped and asked the teenager if he was ok, I was told to f off by the man (who towered over me) or he'd start on me.

This is now a common occurence and I am just very very desperate to move. We are privately renting, I wouldn't want to go on any social housing list around here. Average house prices are £170,000 for a 3 bed in a niceish area. My husband earns £17,000pa, but we have a £50,000 deposit. So I really need to know if my earnings can be taken into consideration to get enough of a mortgage.

Any advice appreciated.

 

[vvaannmmaann]

This was the top of the page on Google;
http://www.mortgagesorter.co.uk/mortgages_self_employed.html
Then this;
http://www.selfcertmortgageuk.co.uk/
Finally this;
http://www.mortgagesfortheselfemployed.co.uk/

Hundreds of others to look at.
As has been said,if you can stick it out in the rental market for maybe another year,house prices may well come down even more.And as a buyer with no chain that will put you in a strong position.Good luck with it.

 

[LisaV]

Thank you that sounds hopeful. I'm just concerned that the banks wouldn't take my income into consideration at all.

I wouldn't consider going for a mortgage with a company I didn't trust, it would have to be with one of the main banks.
We are paying £600pm rent at the moment and have no problem with that, our credit history is good in that we have no debts. One credit card that I sometimes stave paying off just to boost our credit score a little

I did stand my ground with the woman and refused to apologise to her son, which is what she was demanding I do. I also informed the school so they have a log. I honestly did think she was going to hit me. They are a very very rough family. I'm a skinny thing. But I certainly won't be intimidated.

My kids are 9 (10 in two weeks) and 6 and I just want to be able to give them somewhere they can call 'home' which is in a safe area. We both work hard and even when out of work, I didn't claim all the benefits I could have done. It's so frustrating when you've worked all your life and discover that you are actually poorer than your parents were. At the moment getting a decent house seems to be all I can think of. I'd do anything for my children, but the one thing I want to do for them I can't. Life isn't fair is it?

Thanks for all your advice. I'll try to sit on my hands and wait. Another Christmas here though.

 

[Naughty Vend]

Your best bet is your own business / personal bank because they have active history of how you handle your money monthly, you have £27k per annum coming in and should be able to get am approximate £100k mortgage so unfortunately I think you will not be able to get a house at the local rate unless you up your deposit...

...but you don't necessarily want to buy, you want to move somewhere better...

In and around my region (KA9) if you search Right Move you'll see three bed property for £100k to £140k, there is nothing wrong with the area which is sea front next to an international airport and I can be in London in three hours totaltravel time for £20 by 0915 every day. So my question if you shall permit me is why do you want to stay in a deprived area or near one if you have a choice? These choices are (a) move somewhere more affordable and (a/1) rent (a/2) purchase...?

At the moment renting is good, intrest rates are scheduled to increase and the central banks are under pressure to do so... if you are already stretching your money then an intrest rate increase would be catastrophic for you and the family. Saying that there's never been a better time to buy as houses are cheaper than three years ago, they will bounce back immediately in better areas and overall there shall be recovery so if you buy soon that could be good, if you are renting the prospect could get farther away. So that next choice is relocation to a less expensive area and as many have done before you Scotland is cheaper without a doubt, many from the South have never been and indeed I was asked not so long ago "Do you have McDonalds up, there..." to which I answered "No, we only eat haggis and you don't get a McHaggis so Maccy D decided not to come over the wall...".

If relocation is an option think about it, Ayrshire is recruiting at the moment and rental houses are in demand because so many are moving here due to the NATS (Air Traffic) facility and airport expansion... I rented a vacant property out in 4 minutes as the agent was placing the board on the window whilst the current tennant was still in residence. There are plenty of jobs for skilled people...

Good luck, keep your head down and try not to make eye contact with the thuggies... not your problem unless you make it so.

 

[LisaV]

Your best bet is your own business / personal bank because they have active history of how you handle your money monthly, you have £27k per annum coming in and should be able to get am approximate £100k mortgage so unfortunately I think you will not be able to get a house at the local rate unless you up your deposit...

...but you don't necessarily want to buy, you want to move somewhere better...

In and around my region (KA9) if you search Right Move you'll see three bed property for £100k to £140k, there is nothing wrong with the area which is sea front next to an international airport and I can be in London in three hours totaltravel time for £20 by 0915 every day. So my question if you shall permit me is why do you want to stay in a deprived area or near one if you have a choice? These choices are (a) move somewhere more affordable and (a/1) rent (a/2) purchase...?

At the moment renting is good, intrest rates are scheduled to increase and the central banks are under pressure to do so... if you are already stretching your money then an intrest rate increase would be catastrophic for you and the family. Saying that there's never been a better time to buy as houses are cheaper than three years ago, they will bounce back immediately in better areas and overall there shall be recovery so if you buy soon that could be good, if you are renting the prospect could get farther away. So that next choice is relocation to a less expensive area and as many have done before you Scotland is cheaper without a doubt, many from the South have never been and indeed I was asked not so long ago "Do you have McDonalds up, there..." to which I answered "No, we only eat haggis and you don't get a McHaggis so Maccy D decided not to come over the wall...".

If relocation is an option think about it, Ayrshire is recruiting at the moment and rental houses are in demand because so many are moving here due to the NATS (Air Traffic) facility and airport expansion... I rented a vacant property out in 4 minutes as the agent was placing the board on the window whilst the current tennant was still in residence. There are plenty of jobs for skilled people...

Good luck, keep your head down and try not to make eye contact with the thuggies... not your problem unless you make it so.

I'm a northerner myself

Relocation is a bad idea because we have already relocated three times in the past. We sold our house in Preston 8 years ago (hence the deposit) and moved to France to start a better life. 2 years later we came back because my husband struggled to find work and he missed his family. I got a job in Cumbria and so we moved there, but we found it hard to settle. My job turned out to be a nightmare, locals wouldn't accept us and our children hated their schools. So I thought that down south would be a better option, safer for the kids, nicer place.

They are now both settled at school. Our daughter will be in Year 6 in September. My husband works as a digger driver but was put up for redundancy (several of the depots have closed, including the one he worked for in Cumbria) so he is now a truck driver on a lower wage.

If we relocated, there is no guarantee he will get work as they are laying people off in his industry, not taking them on. The kids would be upset as they've made friends here and appear to be doing well.

Even if we bought a house in a nicer area, I wouldn't take them out of their school. But I would feel so much safer knowing that I lived beyond their reach (the family live in the next street from us along with all the other rough families). I wouldn't have to constantly look over my shoulder and I could let my children play out without restricting them to the front garden only.

There are nicer areas around here to live in - i.e. the smaller outlying villages. But prices are steep. I would compromise on the house, but I wouldn't compromise on the area. Not now.

Perhaps I should sign up for some game shows to bump up our deposit? <last resort sigh>

 

[LisaV]

Oh and I lived in Scotland in my early twenties. I was abused nearly every day for being English, refused service at the bar, greeted with a scowl in shops etc.

My father lives on the Orkneys now but he was a highlander for 20 years, there are some gorgeous places and people in Scotland. But to be English and live there - sorry no.

 

[vvaannmmaann]

How odd.My Father (Liverpool born) now lives some 40 miles north of Aberdeen.He has no problems with the locals.In fact his biggest problem is the neighbours keep bringing him fresh fish,game and veggies and he can't eat his way through it all.

 

[QuickHomeBuyers]

House prices havnt come down by 25% yet. Wait an eternity.

 

[Naughty Vend]

How odd.My Father (Liverpool born) now lives some 40 miles north of Aberdeen.He has no problems with the locals.In fact his biggest problem is the neighbours keep bringing him fresh fish,game and veggies and he can't eat his way through it all.

I didn't want to appear rude either Vvaannmmaann, but you know reading between the lines the real problem presented itself and clearly I don't think things will change where ever they live.

 

[mamamanual]

Although I can not provide any help, but still bless you.

 

[LisaV]

I didn't want to appear rude either Vvaannmmaann, but you know reading between the lines the real problem presented itself and clearly I don't think things will change where ever they live.

Oh really? And what might that be? I've had problems settling whilst at Uni in Scotland and we had problems in Cumbria. But equally we had no probs in Preston or France. Are you trying to say that I'm somehow a snob who has a problem with other people?

Whenever we've moved we've introduced ourselves to neighbours, taken their kids in to play with ours and always helped out whenever we can. Perhaps our crime is that we try too hard to be accepted by the local community. Also perhaps that we end up in bad areas because those are the only areas were we can afford to live.

You've read something into my posts that isn't there.

The Scottish/English thing is well documented and whilst it is now thankfully rare, us English folk aren't well thought of and probably for good reason. We can hardly even move from one county to another without there being a problem (lancashire living in Yorkshire, Southerner living up North, etc). It's nothing new.

But thanks for immediately picking up on the worst and assuming that of me. You don't know me but I guarantee that if you did, you would not have made that comment. However I suppose just my posting for advice on here I am leaving myself open to criticism and judgements from people like you.

 

[papverpoppies]

Oh really? And what might that be? I've had problems settling whilst at Uni in Scotland and we had problems in Cumbria. But equally we had no probs in Preston or France. Are you trying to say that I'm somehow a snob who has a problem with other people?

Whenever we've moved we've introduced ourselves to neighbours, taken their kids in to play with ours and always helped out whenever we can. Perhaps our crime is that we try too hard to be accepted by the local community. Also perhaps that we end up in bad areas because those are the only areas were we can afford to live.

You've read something into my posts that isn't there.

The Scottish/English thing is well documented and whilst it is now thankfully rare, us English folk aren't well thought of and probably for good reason. We can hardly even move from one county to another without there being a problem (lancashire living in Yorkshire, Southerner living up North, etc). It's nothing new.

But thanks for immediately picking up on the worst and assuming that of me. You don't know me but I guarantee that if you did, you would not have made that comment. However I suppose just my posting for advice on here I am leaving myself open to criticism and judgements from people like you.

I have lived in Cumbria for 30 years (and you are never a Cumbrian unless born here) - but it's great - just get on with your life, wherever you live.

It's harder in more rural areas, to be accepted straight away, especially if it is a tight knit local community, don't over try, just be friendly and yourself.

What might I ask, do you deem a bad area - I do not think we are talking 'bad' area, in all its true meaning, from what you write.

As in reply to your question, there are loans around for people with a deposit, as already suggested get a good mortgage advisor, they can scour all that is available for someone in your cirucmstance.

Despite all the scary reports about NO mortages for self employed, this is not the case (or not bad as was being forecast some months ago).

Google self employed, large deposit, mortage - that will give you lots of information to research and some idea as to what is happening.

Can I just say, that some of what you have written was not called for.
They are your own experiences, and for whatever reason, they happened they are better left not posted on a forum where all four corners of this Country make up this boards membership, as on most message boards.

I live in a tiny hamlet of 6 houses, on a bad day I can fall out with myself.

If you know you have areas that you would not be happy living, then stay away - there is a lot of space to put down roots out there, so choose carefully.

Good Luck

Poppy xx

 

[LisaV]

Poppy

Thank you for your advice.
Firstly I did not start this to turn into a rant against various sections of the country. I was angered that someone who did not know me, chose to read between the lines and pull out something that was not there.

I made a comment about how I had once lived in Scotland and didn't enjoy the experience, but I did say that the majority were probably not like that. Everyone has bad experiences, but yes it is comedic material as to how parts of England have spats with other parts and you only have to look at the World Cup attitudes to England from Scotland to see how the English generally go down there. I'm not saying anything that isn't known or spoken about freely by the rest of the population.

I was single when I lived there, Aberdeen too as it happens, and I didn't like it. However my father lived in the highlands for years and never had a problem.

Cumbria - yes what you said is true about not being a Cumbrian unless you are born and bred, but that wasn't the only reason we left. None of us really wanted to leave France, the kids in particular were distraught and to this day I think we made a huge mistake there. My job was bad (I was working with kids with behavioural problems and found it really really tough).

Part of moving down here was to be nearer to the channel so we could at least visit France easier, and because I genuinely thought that living down south would provide better opportunities.

What would I class as a bad area? The kind of area where you are threatened with violence from a mother in the school playground. Where kids take drugs on the playing fields in front of kids. Where large dogs are paraded as some sort of badge and every other word coming out of parents mouths of the school run is an obscenity.

I've lived in Manchester on council house estates that have been like a community. A bit rough around the edges but overall the people have had a kind heart and would do anything for you. That community isn't as apparent anymore.

I'd like my kids to be able to make friends in the local area and to be able to safely play outside or in the local park without my fearing that they will find a needle or be bitten by a stray dog.

I'm not a judgemental or snotty person and I'm sorry if it comes across that way in my posts, that is certainly not what I intended. But yes, unfortunately the only areas we've been able to live in so far have been in fairly run-down areas where you have a hard enough time anyway, especially if you are not from the area. But we've made our choice now, I won't move the kids around anymore. It would be nice to live in a safer area but for now this will have to do. There are always people worse off. I shall make more of an effort to be involved and talk to people.

 

[oldeagleeye]

Lisa.

I was a mortgage broker for over 20 years and the market keeps changing all the time including the lending critera. One of the main reasons that we got into this mess for example was that lenders were practically giving away 100% mortgages and more at 6 - 8 times income. In my day it used to be 3 times the main or 2.5 joint income.

Now anyone that goes above that sensible criteria is destined to live on a knife edge for the next few years because we have the lowest interest rates in history and they are bound to rise in manycases doubling the monthly payments.

No matter how desperate you are then don't go much over that 2.5 time income. Unfortunately that would give you a mortgage of just £67500 or buying price of just under £120,000 with your deposit.

This is the problem babe. Even 2 junior doctors of husband & wife police officers can't afford to get a foot on the housing ladder.

There is however some good news but you would have to be pretty sharp off the mark.


There was a schme around in my day which it seems the Gov is now keen to promote mainly because those key workers cant afford to live in the South East.

It is call Part Buy - Part Rent and the way it works is this. Instead of taking out a mortgage on the whole property you can buy a share in the house on mortgage and pay the developer rent on the other part until you can afoord to buy a bigger share and then the whole lot.

Your £50.000 and a £50K mortgage then could buy you a 40% share in a £250,000 property to start with. If your biz takes off you might be able to buy back another 20% in a couple of years and so on.

As for your total monthly outgoings they should be little more than your paying now.

The illustration I have given is only a rough one as all developers have different criteria but this really could be an option for you.

Give it a Goofle then and your find a lot of property out there mainly flats but there are houses around I think Barrat have some and one more thing. Don't be put off if the devoloper is a housing association. The Gov are keen to role this scheme out and they are ideal to administer it. Your still buying the property.

"Part Buy Part Rent" then.

Rob

 

[papverpoppies]

Also ask on here

Poppy xx

 

[Ali-v-8]

You think being English and living in Scotland is bad... Try being Asian and living in Burnley (during race riots). Don't run from a problem confront it. If you run you will only come up with the same problem somewhere else then what will you do..

 

[Zeno]

I am afraid to say that the money you take out of the business does not count as your earnings. Have you had accounts prepared yet?

I doubt many banks will be interested until you have three years trading with supporting accounts under your belt.

 

[glennborthwick]

why dont you rent in a better area. In my experience the differential isnt too much. ven if it was £200 a month more thats only £2400 a year

 

[WebWizard]

Great post. I agree to, it mainly depends on your business and its establishment overall.

 

[papverpoppies]

why dont you rent in a better area. In my experience the differential isnt too much. ven if it was £200 a month more thats only £2400 a year

That's a good idea..

I was reading about a couple who sold their house, but could not afford to buy the type of property they wanted, so they rented.

The money they had from their property they bought a cheap house and rented it out.
That way they remained on the property ladder, and had some income coming in.

Got to have a bot of capital to do that though, but renting is an option.

Poppy xx

 

[LisaV]

Thanks.

We already rent. This isn't about trying to make capital but trying to get a home for our kids.

We have looked into the part rent/part buy scheme. We looked around a house that was for sale at £179,000 but obviously we'd only have to fork out for part of that. I was horrified at what they were selling for that price. It was a new build which was the very same as all the other new builds around it - there was no character at all. It was on three floors, the downstairs being tiny, just a kitchen and a front room with no dining space, so obviously they expect you to eat on your knee in front of the telly.
Outside was a tiny yard.
We were so dis-spirited by what we saw. In these large housing developments they have to reserve a percentage of the houses for the government scheme. These houses are obvious straight away as they are the smallest houses with the least attention to detail. And are over-priced for what they are. For £179,000 we could get a really good house around here.

But from what you've all said, that appears to be our only option. Yes that does then allow us to get on the housing ladder. But my daughter is 10 in two weeks, by the time we are able to get a house we can finally 'live' in, be proud of and call home, she'll be leaving home.

I give up, I really do. I don't know who are buying houses at today's prices, I don't know who can afford to. But the divide between rich and poor is getting ever greater.

 

[QuickHomeBuyers]

Perhaps its the time to wait an eternity and see if they do come down by 25%? Or maybe a day of apolocalype when you can get the biggest in your town for free?

The worst case scenario would be a stagnated market. Investor distored market.

 

[S-Marketing]

179 K, think yourself lucky. You need to spend at least 300 round here to get anything decent. There isn't a house on our road worth less than 1/2 million. If my mortgage was for 170 K i'd be a very happy chap.

 

[Beachcomber]

I would compromise on the house, but I wouldn't compromise on the area. Not now.

I was horrified at what they were selling for that price. It was a new build which was the very same as all the other new builds around it - there was no character at all. It was on three floors, the downstairs being tiny, just a kitchen and a front room with no dining space, so obviously they expect you to eat on your knee in front of the telly.
Outside was a tiny yard.
We were so dis-spirited by what we saw. r.

I'm afraid it may be hard to find what you are looking for until you actually know what you are looking for.

Given your past experiences I would look at renting in another area - you don't want to buy a house only to find it's a worse area than you moved from (and you can never tell what an area is like until you have lived there no matter how much research you so)

While renting you could grow your busines, build up some audited accounts and your husband could look at re-training in a more stable trade or profession - night classes are cheap as chips and in a year or two you will both be in a much stronger position to buy, you will have a better income and you will know exactly what the area is like.

My family and I moved just over 3 years ago to avoid the kids having to grow up in an inner city environment so I understand your motivations totally - just plan and consider rather than jump and regret later.

 

[owas]

we have also seriaoulsey consdier buying, we nealry very did buy a house about a year ago. Me and my wife have been renting private and I hate paying so much amonth when it could be going to owning our own home, not to mention paying rent and saving for a deposit is bloody hard. I also even ore so want to own a home for our children. The area we we live isn't to bad but has it usual trouble makers.
I was over in ikelston the other weeks and could not believe the house process, under 90k for a three bedroom, with garden. I also noticed that Nottingham bank where giving 95% morthgages to first time buyers, on a 6% something interest, and 3.7 times your income, if other banks follow this then maybe there's hope yet.

 

[SSCFIRSTSUPPLIES]

Stick in there and take the advice of using the services of a local broker. I was in exactly the same boat as you only 3 months ago and it took us 6 months to get our mortgage.
Good luck!

 

[LisaV]

Actually, I've just been looking and found a house that would be perfect!
It's in a village location, in the catchment area of a very good secondary school and close enough to where we are now so that I don't have to take them out of their primary school.
It's on an ex-council house estate of around 30 houses, the rest are all huge detached private houses. It's gutted and would need major modernisation but nothing I don't think we can't handle.

It's on the market for £132,500 with two separate estate agents - no chain.

Now if we can manage to get it for £130k say, we'd need a mortgage then of £80k. Possible? I'm making an appointment to view it tonight.

And I have also phoned the homebuy scheme to ask them to update our details and let us know if anything suitable comes in.

 

[LisaV]

Ah actually forget that, someone has offered more than the asking price.

 

[The Pines]

Ah actually forget that, someone has offered more than the asking price.

Double-check that with the other Estate Agent - they are all lying scumbags of the highest order! It's amazing the amount of properties that have been on the market for 3, 6 or 9 months, and then when you make an enquiry all of a sudden there was another bid that very same day...

Also, make sure that you are getting all of the working tax and child tax that you're entitled to - this will be added to your mortgage application.

If you are earning 12k p/a and your husband 17k, then you should be entitled to atl east 300p/m from tax credits, 3.6k p/a.

That would put your combined income at 32.6, and with your 50k deposit you would easily have enough for the house you've seen. A 50k deposit on a 132k house puts you in a very strong position.

I'll bet that the other 'bidder' is named either
Mr P Hantom, or
Mr D Oesn't Actually-Exist, or
Mr U Nable-to-Complete

 

[vvaannmmaann]

More bad news for the OP.
http://www.telegraph.co.uk/finance/...ion-mortgages-likely-to-be-banned-by-FSA.html

 

[oldeagleeye]

First of all to reply to VV and that FSA report. I was actually the first mortgage broker in the UK to offer a truly self-cert non-status mortgage way back in about 1986.

Before then however there was a compromise between having to provide 3 years accounts and that was a letter from a certified accountant that the customer could afford the repayments.

I can see that being resurrected as a compromise this time around and there does need to be one. Take those MP's 2nd homes for example. They wouldn't be able to buy on the salary criteria and expenses are not usually added to income to increase borrowing power. A letter from an accountant saying the payments are affordable could provide the answer. In fact that is the precise wording the FSA are looking at. Can the buyer afford the repayments.

Now back to the OP.

Having read over her posts again I think that she and her hubby need a reality check and Lisa I am afraid to say is coming over as a bit of a snob.

On the reality side she says that she has only recently started earning money from her business. In fact she says that she didn't earn anything until last month but now suddenly 2 business are going to produce £12,000 a year. You can't commit to a mortgage on the strength of 1 months income. That is totally irresponsible. Which leads to reality check No 2 and it is a tough one.

Reality Check No 2. Your husband you say Lisa earns £17,000 a year and I presume that is gross income which means that there is about £3K off that in tax & N.I leaving £14,000. That is poverty line minimum wage dear lady. What makes you think then that you can afford to buy your own property. In fact I know teachers and police officers with joint incomes of around £50K a year and they have accepted that they can't afford to buy.

What surprises me more than anything about your situation is how you can even afford £600 a month in rent and survive without some sort of family credit. I am assuming then that the £50 came by way of inheritance or something. I can't see how you could have saved £5K a year for 10 years bringing up 2 children.


BTW. Just so that you don't feel that you have missed out on that £132K house Lisa. First of all bargain basement property especially those needing substantial repairs are fetching higher than guideline prices everywhere even at auction. You never were going to get it cheaper then and you simply can't knock off incidentals either. What about survey fees - solicitors costs - moving. Even if you have a reasonable deposit most lenders now charge an arrangement fee. At best then you would be looking at an £85K -mortgage and here is the real killer Lisa. If that property needed complete refurbishment costing say £20,000 quid the lender would withhold the cost of that so the initial mortgage offer would be only be There would be a £23,000 shortfall when you take account of at least £3K in legal fees -disbursements.


Reality Check 3. You mention a home to be proud of but why does that mean that you have to own it. In fact you never will. All you will have is a huge debt around your neck for 25 years of more. You will have to fact tough choices with a big mortgage and when the roof leaks or the drains get blocked it will come right down to real poverty. Get the repairs done and no money for the children's shoes.

I think that you need a complete change of attitude to life Lisa. Home ownership may have had the benefit of freedom in the past. To sell up and move to another area. That is no longer the case. Early redemption of mortgages often carry heavy penalty fees and of course if your stuck in negative equity - forget it.

Renting however does have that benefit and as for a home to be proud of. You mean if you are buying in an area where you are surrounded by huge big houses that is something to be proud of. It is not it is snobbery and a British thing.

You want real class go to Berlin - Madrid - Rome or Paris. The most beautiful homes are apartments hidden behind boring plain facades and almost all are rented.

Don't knock it and even if you make a great success of your business never dismiss renting as a more favourable option than buying.

I know that I have never felt more stressfree standing at the back door of my little rented bungalow watching the rain acoming teaming down and that crack of lighning lighting up the sky. In fact with a glass of wine and a long panatella standing at the back door during a thunderstorm is one of my greatest pleasure in life.:|

Let the landlord then worry about one of Zuce's thunderbolts going astray and blowing the roof off as he drive the Titans underground. Renting you can't beat it.

rob

 

[LisaV]

Hi Rob

To address your points: I have been with one business since July of last year. He was only paying me expenses of £50pw but has now committed to £500pm. It was his first business, very new, but things now appear to be looking up and he is getting the ad revenue to pay my wages. The second business is a member of these forums who is an established business and is happy to take me on long-term at around £500pm again. That makes £12k pa.
My hubby gets in £17k but yes, that is before tax.
You are right with the tax credits.

The £50k savings comes from a house sale in 2002. We owned a property back then which we sold to move to France.

Now as to why I want to buy again. We have been privately renting since 2002. Renting in the private sector is very restrictive, we have been told by the letting agent that we may not decorate the rooms or make any changes to the house. Very often when repairs are needed, we've had to wait for weeks (in one case months) for them to be fixed. There is no stability in private renting as the owner could decide to sell at any time and then we'd be out.

As to where we live. I don't care if it's a house such as the one I found that was an ex-council house on an ex-council house estate. So long as it's safe. When you have young children you cannot close yourself off from your surroundings or neighbours. You meet them every day on the school run, your children play with their children, etc. So of course I want my kids to be brought up in a safe environment - who wouldn't? If that makes me a snob then so be it.

We also have the advantage of a guarantor if all else fails. I'd rather not use that option, but it's there in the form of my father-in-law.

As you say, our income is pitiful and very often we were struggling to pay the rent and bills, but with my income now better we are coping just fine. £600pm rent or mortgage would be our limit however so we would need to bear that in mind.

Perhaps you think we are the kind of people who get huge morgages way over our heads that ultimately lead to the collapse of banks? I can assure you that with not one loan to our names, nothing on credit, we are not. I'd happily cram into a 2 bedroomed house so long as it gave me the stability and security that I think I am after right now.

 

[The Pines]

LisaV,

If you have a 50k deposit, plus a gross income over £30k, plus a guarantor, you are in a very strong position. Right now, Banks are expecially nervous about covering the potential drop in house value.

That's why they want at least 25% deposit in order for you to get the best rates - in the event that if you default they will be able to repossess and sell the house without loss to them.

Forget the whole 'Renting Vs Buying' argument - that's secondary to the stability and upbringing of your children.

If you continue to rent you'll end up like everyone who lives on a council estate - absolutely no incentive to improve your life or surroundings, because they welfare state will always be there as a safety net. It was never designed as an alternative lifestyle, but for many it is. I've been there, and would never go back. The people are lazy, useless scroungers who HATE to see anyone improve themselves. They wear ASBO's a badge of pride!

Check online to see what mortgage you'd be eligible for with your deposit and £600p/m payments. Then get off this forum, make an appointment with the Bank, get your mortgage arranged ASAP, and move to a better area.

I'd also suggest you try to keep at least £5k to cover the costs of the move and any emergency repairs if you move into the house you've mentioned. You'll be able to do the decorating yourself, but don't touch anything electrical or gas related.

 

[LisaV]

Well not all are scroungers - there are some lovely people with massive hearts on our estate, but unfortunately it only takes a couple of bad families with an attitude to ruin it all.

You are right though, the renting vs buying argument is secondary. Our landlord is not an investor, he has rented this house out whilst he went to live with his girlfriend. No doubt the reason he has not sold is because he may well yet need to move back in should things not turn out.

I would never recommend private renting for families, it's simply not secure and tenants are messed about. Yes we have rights but who really wants to rub their landlord up the wrong way by threatening legal action? That's a great way to lose your house.

I shall keep my eye on the market and hope that something turns up. Thanks for the kind words and encouragement all.

 

[oldeagleeye]

PINES. You are talking absolute crap. On an income of just 17,000 the most mortgage the OP could get is £51,000. Her own income wouldn't be taken into account for 3 years and so what it goes up to about £65K they can borrow.

Get real pal. Allowing for fees you can't buy diddly squat in Britain for £110,000 quid.

Rob

 

[The Pines]

PINES. You are talking absolute crap.

Thanks for those words of encouragement. Are you related to my wife, perchance???

On an income of just 17,000 the most mortgage the OP could get is £51,000. Her own income wouldn't be taken into account for 3 years and so what it goes up to about £65K they can borrow.

You've forgotten that they also take into account tax credits - working tax credits and child benefit. You're also making a MASSIVE assumption when you say that her earnings won't be taken into account. But lets just discount them anyway, just to keep you happy...

With a £45k deposit on a £140k house, they are putting down a 32% deposit, well over the current 25% safety threshold the banks want. So, they have a 17k income, plus (I would guess) about 3.5k from tax credits, gives us £20.5k. Now, I know for a fact that with such a high deposit that they'll go to 3.5 times the husbands earnings, PLUS the tax credits. So now, we're looking at 3.5 times 20.5k, giving us £71,750 mortgage. The problem is that they need 95k (140k price - 45k deposit). This is where the FiL comes in as guarantor to cover the difference. Their repayments on a 95k mortgage would be a lot less than the £600 p/m they are able comfortably able to manage. Of course, if interest rates go to 16% then all bets are off.

At no stage did I say that it was guaranteed or going to be easy, the exacts words I used were...

If you have a 50k deposit, plus a gross income over £30k*, plus a guarantor, you are in a very strong position.

(*Now reduced to £20.5k because I was, apparently, talking crap)

The point I am trying to make is that her buying a house, soon, is achievable, with a bit of effort, and support from her FiL.

Get real pal. Allowing for fees you can't buy diddly squat in Britain for £110,000 quid.
Rob

Thanks, pal, but I didn't create the housing market in Britain. I'm just trying to suggest ways for the OP to buy a house and, hopefully, create a better life for her family.

 

[LisaV]

Cheers Pines

I've had differing opinions on here. Some say there is hope, others not. Some say prices will come down, others not. Interesting that Batra Ventures keeps trying to goad me into a response, having once said that my wish for prices to come down to affordability level for most of Britain was "pathetic". So far I've ignored his, not very helpful, responses.

A reality check is always helpful however, as is a dollop of optimism. After all, I'm sure when you all started out in business there was the one person who was all too ready to pour scorn on your dreams and tell you that you might as well give up. If you had listened to that person you would not be where you are today. So whilst it's good to have that reality check, it's also good to have a little hope that my, not too unreasonble dream, of bringing my kids up in a HOME and not someone else's house, is achievable.

 

[oldeagleeye]

I don't want to get into a slanging match with you PINES but you frankly don't know didly squat for certain and you never will unless you are in a position where I was a 'master' mortgage broker who actually packaged mortgages on behalf of lenders.

In real terms that meant that I was responsible for income enquiries - arranging surveys etc. and something you have probably never hear of 'risk assessment' and that last element varies all the time. Last year for example I would have had little hesitation in providing a mortgage to a civil servant at the MOD because it was mainly the private sector that was suffering the redundencies. Now there are going to be a million public sectors workers this year facing the same fate.

Now I don't know what the OP own work entails only that she has only been earning £1,000 a month for just a month. I repeat 1 month. Now that don't impress me one bit when it comes to her being able to contribute to a mortgage of nearly £100,000. I would be even less impressed if her employers were running small web sites trying to sell advertising space. At best then her income is very fragile and I would want to see proof of earnings for a least 18 months even without the new FSA guidelines.

Now I don't know what hubby does. Given their children's ages I imagine he is in his 30's however and basically on min wage. Not a highly skilled professional then but at this period in time that is not terribly important. What is however is that with no clear career development path I am not going to lend him more that 3 times his income.

Which ever way that you look at it Lisa and her family are stuck with a maximum borrowing power on mortgage of £51,000 for the next couple of years at least. Unless of course you think that all those lenders that have just had their fingers burned are going to be kind hearted souls and give money away again. Well it ain't going to happen.

It is pointless then Pines - and I might add somewhat cruel to give Lisa false hope with your you know it all for a fact. You don't I am afraid and the situation for most people is going to get even worse.

Until now lenders virtually ignored other debts like credit cards a and car finance. Under the new purposed FSA guidelines they will become part of the affordability test. You want more. Millions are on fixed rate mortgages when they expire in say 2 or 3 years and payments go up by around 30% they might not even be offered a variable rate but forced to sell.

And finally 2 points. While I have every sympathy with Lisa's position she and her hubby it seems did take a gamble on buying a property in France where if they had got in a couple of years ago they may have been in on the housing ladder. No such luck for the daughter of a friend of mine.

She is 30 and a fully qualified solicitor on about £30K a year and she knows and indeed accepts that she will never be able to afford to buy even a small flat in London without marrying a guy on similar income - and if and when she does she also accepts that she wouldn't be able to afford children until she is in her mid 40's if ever. It is a tough world out there and we have to cut our cloth accordingly.

Lisa doesn't like renting and the reason she gives is uncertainty. That may be the case with private buy to let landlords but there are a huge number of companies out there that rent property and of course housing trusts.

A little bit of effort into finding a professional landlord then might not go amiss and get her out of this desperate mood.

Rob