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 £20k 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 £20k. 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!