As some of you may have seen during a Twitter conversation with a few of you, I am having trouble finding a mortgage. I am 24 now and those of you who know Sophie my better half, she is nearly 21. We’re ready to branch out and get our own little happy place. But for various reasons, we’re not having much luck.
Lets set out the stalls. Soph works for her Dad’s business part time and gets good money for the hours that she does. I work for my family run company on a self-employed basis. I know that might sound odd to a lot of you, bearing in mind it’s the family business. But there are wider issues and certain advantages to it being that way for both me and the business, so can’t read too much into that.
We have been looking at the new-build developments which have the various Government schemes to hep first time buyers get on the property ladder. On the face of it, they look great. Take the help-to-buy scheme. You put down a 5% deposit, the Government lends you the other 20% and you get a 75% mortgage. There is another where you put down just 5% and you need to find a 95% mortgage. Sounds good no? No, is the answer. These deposit amounts mean nothing if you are self-employed. Due to the inane way the Government seems to corner self-employed people, 75% and 95% mortgages are almost impossible.
For those who don’t know, I’ll give you an example. For arguments sake, a ÂŁ20k a year self-employed wage, is NOT what the bank or mortgage lender goes on. Take off expenses (which you are encouraged to boost as much as possible) and take off the amount you are allowed to earn tax free, then THAT is the number they go on. One which is greatly reduced from ÂŁ20k. So, what that means is that ALL of the Government help schemes out there at the moment are a total waste of time as you are miles off what a lender will give you based on that “profit” you have earned.
It’s so frustrating. We have done our homework. We have added up all the cost involved with the place we have found where we would like to live, and weighed that up against what we earn per month. We can afford it, with a decent amount of money to spare after costs, so we wouldn’t be living on bread and water. Yet, despite having more than enough cash for deposit for the help-to-buy schemes, and the ability to actually pay for a mortgage every month, my self-employed status, even though I have 7 years of books and have worked constantly for the same business, slams a nice big fat door in our way.
I could go employed, but there are certain disadvantages to the business during the quiet periods of our industry that I cannot be bothered to justify in this post. I could “manufacture” some pay slips, but I want to do this honestly. I don’t want to borrow money from the bank of mum and dad either. It is saddening to see Soph get so upset and frustrated. I do feel part of the problem because I’m not technically employed.
I would like to thank those I spoke to on Twitter for their advice and wisdom. I only put one tweet out yet I got plenty of responses! Thanks for those. I am speaking to our own financial advisors, as well as other people’s recommendations. We are trying as many options as possible, there must be something out there which can reward a young couple trying to do it properly!
Obviously, I will update you all if I have some good news to report!
Best of luck with it. The silly thing is that you’re one of the most dedicated people in terms of your job that I’ve encountered. Self-employed people are getting a real kicking in little ways at the moment and this is another one of the ways the government purports to be helping by offering something you can’t actually take up.
I have no advice, I’m afraid. Just keep trying and pointing out the flaws in the logic. You can’t be the only one finding this wall in the way.
Thanks Lucy :-)
As I said, it’s so frustrating, we both work hard every day, for very little, slow progress. I know we certainly aren’t the only ones in the same position. Thanks for your support and thanks for reading :-) catch you on Twitter!
DGB
It just seems the way of the world just now,most honest people get punished,all these government schemes are a total joke,I know how you feel,I am trying to launch my own range of security products and all these government schemes have all been pulled from under our feet,no one can give an honest answer,I have some great ideas but as I said it s the honest and hard working that get punished,hope all goes well in the end though.
Thanks a lot Mark, much appreciated. The whole thing is rather frustrating at the moment. What sort of problems are you finding trying to launch your own company? I’ll keep you updated.
Thanks
DGB
I have found that because of the economy there is little funds of any sort available,business finance,grants,mortgages are thin on the ground,I cannot get any funding at all to launch my own brand of security products,I have even tried getting a licence agreement from the lock manufacturers,but none of them are willing to take it on,so it s back to the drawing board to try and secure funding,if anyone knows where to get help I will thank in advance,all the best for the future.
That’s the trouble when you try and minimize the amount of tax you should be paying it makes it difficult to get mortgages. However have you tried a broker yes it may cost a couple of grand in fees and you may pay a higher rate for the first couple of years but it will get you started. Also try http://www.principality.co.uk/ they tend to help people in your situation with lower fees but you will pay 2% higher than a “regular” person would however at the end of the two years you should be able to move to a high… Read more »
Thanks for the link Peter, I shall take a look later on :-)
Yes we’re looking at brokers to help us out, going straight to a bank just simply isn’t an option at the moment. Like you said, it would be worth paying a little higher than normal if it meant us getting on the ladder, I would be prepared to do that.
Thanks for your comment and support :-)
DGB
Just to throw a spanner in the works. Don’t get too disheartened if you can’t get a mortgage at the moment. Owning your own home is not the be all and end all (although our society tells you it is). Yes there are certain financial advantages long term to owning your own home but consider that renting can also be to your advantage. Renting – you don’t have to worry about maintenance bills (my house – old “character” cottage is a money pit!), if something goes wrong you just call the landlord and if as you say you can put… Read more »
Hi Sharon I do take your point about it not being the be all and end all. Don’t worry, you’re not sounding airy fairy! I appreciate any feedback or comment! At the moment, me and Soph are on a steep learning curve and are listening to everything everyone is saying to us, so your comments and points are very much welcome :-) I think the prospect of owning our own place and putting our own stamp on it is what appeals to us. The thought of landing a dodgy landlord who takes very little care of the property we’re in… Read more »
Do you guys have the ability to put down more than 5% down and bypass the first-time buyer deals? I have NO idea how everything works in the UK because I’m in the US, but I’m looking at buying my first home too. Everyone here is promoting the first-time-buyer deals, but they’re not a good solution for me, as I’d rather put 10-15% down and get a better mortgage rate on a loan instead of only putting down 3.5% (our current deal here). Like I said, I’m still in the process of figuring everything out myself in the states, but… Read more »
Hi US Chick Yes we have the ability to put more than 5% down. We’d rather do that to be honest. But I think we’re resigned to the fact of having to put down a massive deposit, like most do traditionally here in the UK. We are also looking at various other lenders and brokers. The banks in the UK are not helpful at all in general, never mind just for mortgages! I hope you find success in finding your own home as well! Hope it’s a little bit easier in the US than it is over here! Thanks for… Read more »
I can recomend someone who I have dealt with for 15 years who has never failed me or anyone I have referred to him
TG