Getting on the property ladder feels impossible. And even more so if you’re self-employed. But somehow we scrapped though. But boy did we hit a lot of obstacles on the way. It took us from April 2018 until July 2018 to find a mortgage company willing to give us the £113,400 (we had a £12,600 deposit) we were asking for. It was the biggest question mark we ever had on our lives. Everything was in limbo, paused and delayed for what felt like an eternity.
We got a couple of maybes and yes’s which sadly changed into no’s. We had a mortgage broker who took our money and told us she would 100% find us a mortgage, yet when things got difficult she fell off the face of the earth and disappeared, without a trace. Luckily we managed to find a mortgage through another broker and the original one gave us our money back. I would recommend trying to find a mortgage yourself before involving a broker. Brokers are perfect for situations like ours when you know the bigger more popular lenders aren’t going to bother.
Most lenders like self-employed people to have three years of accounts behind their backs. So keep this in mind. We knew there was a high chance of not finding a suitable lender with only one year. BUT it is possible! So just keep your head up.
The mortgage broker we used and that did get us a mortgage is LargeMortgageLoans.com (this post is in no way endorsed by them, just a brilliant company who got us where we wanted). They specialise in more unique cases of mortgage loans and work aside unique lenders.
Obviously, they are not going to be able to get you a mortgage if you’re not making enough money to make the monthly repayments. Most lenders will let you borrow 4 times the amount of your annual income. In that one year of accounts, Bradley managed to make an income just shy of £30,000, meaning we could borrow up to £120,000. You’re obviously not going to be able to get yourself a mortgage if you’re only making £6,000 a year, because essentially they are only going to be able to let you borrow £24,000 – and try to find a house for that much!
If you’re self-employed you’ll know just how quickly business can change. One moment you can be super busy, making lots of money. Other times work can dry up. This is why lenders like you to have 3 years of business accounts. So they can get a true feeling of how much money you make, and how that changes over the years. This way they can work out an ‘average’ income which will then define how much they are willing to let you borrow.
Bradley is an electrician. We bought Bradley’s business from his old boss. A business which had been running over 20 years. It was the business he had worked for the last 4/5 years. They trained him up, put him through college (apprenticeship) and taught him everything he knew. But shortly after he fully qualified it all started crumbling down. Apparently, it wasn’t making enough money and the lady that owned it mentioned about closing it down (funnily enough around the same time that she was supposed to be paying him a proper wage, not apprentice level). We took our chance and offered to buy the company from her. After a few months of back and forth, we forked out £15,000. Which essentially gave us, the name, the van, some tools and the mobile phone with the years worth of contacts in. Still doesn’t feel like £15K worth of stuff for a failing business but that’s just how it is.
Now in no way am I saying you need a company with all this back story and all this age to get your mortgage. I’m just telling you how we personally got there. I don’t think to have a business with so much history actually helped us because all the years of accounts were appalling. But in a way, this helped. It helped show these lenders the MASSIVE jump in income made from the year Bradley took it over. We were doing everything right and by the books. It showed we had the passion and drive to turn something around and make it successful.
At the time of getting our mortgage, I wasn’t self-employed. The brokers told us it would be simpler and easier to keep me and my work off the mortgage applications as I was making very little back then. That I might even bring our loan amount down, so we decided just to focus on Bradley’s earnings.
If you have assets in your business, your accountant will know to take deductions from your annual income so that you don’t get taxed as much. Things like vehicles, business properties and tools might factor into this. Making these deductions helps bring your annual income down (less income = less tax to pay). But, less income also = less you can borrow for a mortgage. We decided not to declare a single thing on that first year of accounts. Meaning we would have a larger annual income (but also meaning a hefty tax bill). In our eyes getting the mortgage was the top of our priorities, the tax bill would be something we’d deal with when the time came (you usually get until January after submitting your yearly self-assessment in April to pay your tax bill).
We were given a nasty tax bill of £7,000 to pay in one lump sum for that January 2019. We always knew a high tax bill was coming up so we saved and saved for it (even selling our precious car) to pay for it. But in our eyes, it was the price to pay to be able to be sitting in our own home.
We’ve now almost been living in our home a whole year! It’s flown by so fast, you’ve probably seen our home renovation account on Instagram and seen the massive change we’ve made within such a short space of time. All those months of wondering and heartache were truly worth it. Now we’re in, we’re in. We’ve paid every bill on time and in full since. So those lenders needn’t worry about our repayments!
I’m praying this post has given you some hope to hold on to. It can be done! I remember scurrying around on the internet for any stories or advice for such a complicated mortgage application, but there was just nothing out there. It kind of crushed our hopes and dreams as everywhere we turned we read ‘3 years of accounts’. But we crossed all our fingers and toes and we managed to scrape through.
I’m beyond thankful. If you have any questions or just want someone who understands the heartache. Please message me either here in the comments or over on Instagram. I always wanted someone to talk to back then, someone who’d been down that same road.