Buying a house when self employed

Panic Stations

Hi All,

I've recently left my full time job to start my own business and become self employed.

I'd like to be in a position as soon as possible to buy a house.

I was just wondering if anyone knows or has any idea what banks look for when applying for a mortgage as a self employed individual.

Any advice would be great.

Thanks

drunkmonkey

You could struggle if your not in business long and haven't accounts. Have you contracts for work or anything you could use as proof of future income etc. Have you another half, can ye go in together.

Panic Stations

So the business is profitable and has contracts in place to prove monthly income.

I have a partner who works as a nurse who obviously has a stable income

Mike3549

Not 100% sure, but heard you need 3 years of audited accounts or something similar

drunkmonkey

They might want a cash flow statement for the next few years and whatever accounts you can do up. Probably want a look at your business plan.
Probably worth chatting with a broker.

jimmii

This came up in the business forum not so long ago too but didnt get much of a response. Not long after we started our business we went into AIB as standard they want 3 years of accounts but all they really wanted was proof of ability to pay so contracts would help. Because we had other income and assets the fact we had a new business didnt really matter all that matters is your ability to repay.

drunkmonkey

Interest rates are going up in the next year or so factor that into your budget for repayments. AIB will be.

drunkmonkey

drunkmonkey wrote: »

Interest rates are going up in the next year or so factor that into your budget for repayments. AIB will be.

Source? No indication of rates being increased to mortgage holders at the moment imo.

Panic Stations

I have a good/steady income already and savings in the bank.

We have enough saved between us for our deposit and no outstanding loans,overdrafts and have proof we've been putting money aside every month for this.

I'd just like to try get on the property ladder as soon as possible so would like to know how long I may have to wait to apply.

jimmii

Panic Stations wrote: »

I have a good/steady income already and savings in the bank.

We have enough saved between us for our deposit and no outstanding loans,overdrafts and have proof we've been putting money aside every month for this.

I'd just like to try get on the property ladder as soon as possible so would like to know how long I may have to wait to apply.

Go in and ask. No harm in seeing what they say. Like any application it all depend son your personal circumstances that's what they make their decision based on.

Bythefire

Could you apply as an employee? If you are paying yourself a wage, I presume you have a payslip from your business?

Panic Stations

jimmii wrote: »

Go in and ask. No harm in seeing what they say. Like any application it all depend son your personal circumstances that's what they make their decision based on.

Going to do that this week for sure.

Panic Stations

Bythefire wrote: »

Could you apply as an employee? If you are paying yourself a wage, I presume you have a payslip from your business?

I don't think that's a route I'd like to go down but if all comes to all....

Bythefire

Panic Stations wrote: »

I don't think that's a route I'd like to go down but if all comes to all....

I'm not even sure if it's possible, it just came to mind when I read your post.

Panic Stations

Bythefire wrote: »

I'm not even sure if it's possible, it just came to mind when I read your post.

I'd say the banks are wise to that one

jlm29

I thought my OH was asked for two years of accounts signed off by his accountant when we applied. That was AIB though, so maybe it was three as per the above posts.

drunkmonkey

Nothing funny about paying yourself a wage, are you a sole trader or ltd? There's different prsi classes you can get away with paying a cheaper one but won't get a full state pension. Tbh, bank don't care they want to see how much your making.
Your accountant should be well up on all this. It's one thing you shouldn't skimp on a bad one will get you in trouble.

Crusty Jocks

Mike3549 wrote: »

Not 100% sure, but heard you need 3 years of audited accounts or something similar

This is 100%

drunkmonkey

Crusty Jocks wrote: »

This is 100%

He may have to bend the knee to nursery in that case:D

jimmii

Crusty Jocks wrote: »

This is 100%

That's not true it completely depends on your circumstances. If they have enough in their favour they will look past it. We obviously arent going to get all the information here but not having 3 years doesn't mean its game over.

Panic Stations

It's a private limited company.

I was wondering would they look at the turnover of the business or would they be more looking at the salary I give to myself?

drunkmonkey

Profit, turnover is vanity.

jlm29

Panic Stations wrote: »

It's a private limited company.

I was wondering would they look at the turnover of the business or would they be more looking at the salary I give to myself?

They’ll look at both. They’ll take your salary into account for affordability, same as they would for an employee, but they’ll also make sure that the company can keep paying you the salary

Mrs OBumble

drunkmonkey wrote: »

.... are you a sole trader or ltd? There's different prsi classes you can get away with paying a cheaper one but won't get a full state pension.

Just for the record , this is incorrect: state pension is covered by class S.

drunkmonkey

Mrs OBumble wrote: »

Just for the record , this is incorrect: state pension is covered by class S.

What am I on about I've forgotten but I know my accountant made me do something so I'd be entitled to something. It had something to do with the state pension. It was something to with the type class I was paying or not paying.

Panic Stations

jlm29 wrote: »

They’ll look at both. They’ll take your salary into account for affordability, same as they would for an employee, but they’ll also make sure that the company can keep paying you the salary

That's what I was thinking would happen.

Senature

I know several self-employed people who have got mortgages without 3 years of audited accounts. It might help you to talk to an independent broker as they will have a good idea of both what you will need and which banks are likely to grant a mortgage to you in your current circumstances.

Phileas Frog

I'm self employed - Class S Director - and didn't need any company accounts at all.

Panic Stations

Phileas Frog wrote: »

I'm self employed - Class S Director - and didn't need any company accounts at all.

What bank was that with?

Panic Stations

Senature wrote: »

I know several self-employed people who have got mortgages without 3 years of audited accounts. It might help you to talk to an independent broker as they will have a good idea of both what you will need and which banks are likely to grant a mortgage to you in your current circumstances.

Any idea on what banks allowed that?

Senature

Panic Stations wrote: »

Any idea on what banks allowed that?

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