Assets and getting a mortgage when self-employed

RoboRat

I am considering setting up my own business, I already have one that is doing well but I reinvest all the money back into this as I also work full time in a well paying job.

I have been approached a few times to be a consultant and I am thinking that I should do it before the opportunities pass me by. I am turning 40 next year and I feel if I don't go solo, I will regret it.

The problem is that I am just in the process of selling my house and looking to build one. I have looked into getting a mortgage and I would need to have 2-3 years of accounts before I can get one. My wife is a full time permanent teacher and we have land to the value of ~ €150,000 to our name.

Would a lender take that land into account when offering a mortgage? I have my current mortgage for over 10 years and never missed a payment, so I have a proven track record. If we went on just my wife's salary, getting a house is not feasible but I don't want to wait 2-3 years, I have already put this on hold until my house hit parity so I could sell, and we are trying to plan for the future and decide where to send the kids to school next year.

Are there any options with the assets we hold? I am a second time buyer and by default, so is my wife, even though she was never on the deeds as we weren't together when I bought the house.

Any advice or insight would be most appreciated :-)

phormium

You could try a broker with your query but the number one criteria for a bank when lending is ability to repay, assets come second. Unless you can find one that deviates from that usual rule then I don't expect the assets are going to be of much help if the qualifying income is not there, or not there for the required time based on the bank lending policy.

Best thing you could do would be stay in the well paying job until your new house is built, then consider then self employed route, the humour for it might have gone off you by then, it's not all it's cracked up to be

Trish56

I don't understand if you are still in a permanent job that you don't apply for a mortgage now as if you wait until you're self employed you will have to provide 3 years trading accounts and now you just need to provide a salary certificate completed by your employer, P60 for 2015 and 3 months recent pay slips.

I presume you are going to build on the land you own so that will be taken into consideration when applying for a self build mortgage. As a second time buyer you can only borrow 80% of the cost of construction and cost/value of site subject to valuation on completion. You also need to add 10% to the cost to cover costs overruns. If you already own the site then this will probably cover the 20% deposit. Lender will access your mortgage application on repayment capacity and affordability. For instance after stressed tested monthly repayments on all loans and childcare costs if any are taken in consideration you will need to have €2550 net disposable income per month. Also if stressed monthly repayments on new mortgage are say €1500 monthly, then you need to show affordability as in how much you mortgage repayments are now plus evidence of savings to make up €1500.
Hope this helps.

RoboRat

I don't understand if you are still in a permanent job that you don't apply for a mortgage now as if you wait until you're self employed you will have to provide 3 years trading accounts and now you just need to provide a salary certificate completed by your employer, P60 for 2015 and 3 months recent pay slips.

I should have clarified that the reason I am thinking of going solo is that I may not have my current job next month and I am 40 next year, I have no significant debts at present, so I thought it would be best to do it now. I presume its not possible to apply for the mortgage now and draw down later? I would have thought they would do the full check when I draw down?

I presume you are going to build on the land you own so that will be taken into consideration when applying for a self build mortgage. As a second time buyer you can only borrow 80% of the cost of construction and cost/value of site subject to valuation on completion. You also need to add 10% to the cost to cover costs overruns. If you already own the site then this will probably cover the 20% deposit. Lender will access your mortgage application on repayment capacity and affordability. For instance after stressed tested monthly repayments on all loans and childcare costs if any are taken in consideration you will need to have €2550 net disposable income per month. Also if stressed monthly repayments on new mortgage are say €1500 monthly, then you need to show affordability as in how much you mortgage repayments are now plus evidence of savings to make up €1500.

Yes, we are building on that site but we are only taking a corner of a very large field so the rest will stay in tact. I won't have the second mortgage by the time we go for the application (fingers crossed, we are at sale agreed) so that shouldn't be an issue.

I was just hoping that the land value we have could in some way be offset against the mortgage.