Mortgages and self employment

[stanwan]

Hi folks,

I am having a real nightmare trying to sort out a remortgage with First Direct. I'm self employed and wish to agree a mortgage in-principal.

10 years a go when I applied for my current offset mortgage, they were happy with my self-assessment returns. Now they are asking for fully audited accounts from an accredited accountant. Unfortunately, my accounts are not audited (I wish i earned enough to make it a necessity).

First direct refuse point-lank to organise mortgage unless the accounts are audited. THey have suggested get them retrospectively audited but I have no idea how much this would cost? Are there other options I could consider?

I'm surprised they are being so inflexible considering my existing mortgage is already paid off an I am going for 50% LTV.....

[Steffan]

There are a number of options.

Other lenders may react differently but I suspect that to get a decent rate you will need audited accounts.

You need to talk to an IFA there are several on Pistonheads.

Cost of audit will depend upon the amount of work involved nut in my experience over 40 years in Accountancy, a decent professional should save you money.

Suggest you prepare a brief detailed note of the work you need and ask local accountants to give an estimate of costs. Recommendation is the best reference so ask around.

An IFA will probably be able to direct you to such a professional and identify your best chance of low rate/low fees etc.

[CaptainSlow]

Most lenders will accept an Accountants' Certificate.

[groak]

Ask them if they'll accept an SA302 from the tax office. That should work.

[stanwan]

CaptainSlow said:

Most lenders will accept an Accountants' Certificate.

Sadly my bookkeeper is a family friend and does not have certification. Looks like a third party will be required.

[CaptainSlow]

stanwan said:

Sadly my bookkeeper is a family friend and does not have certification. Looks like a third party will be required.

Yes, the accountant will need to be suitably qualified.

[Sarnie]

stanwan said:

Hi folks,

I am having a real nightmare trying to sort out a remortgage with First Direct. I'm self employed and wish to agree a mortgage in-principal.

10 years a go when I applied for my current offset mortgage, they were happy with my self-assessment returns. Now they are asking for fully audited accounts from an accredited accountant. Unfortunately, my accounts are not audited (I wish i earned enough to make it a necessity).

First direct refuse point-lank to organise mortgage unless the accounts are audited. THey have suggested get them retrospectively audited but I have no idea how much this would cost? Are there other options I could consider?

I'm surprised they are being so inflexible considering my existing mortgage is already paid off an I am going for 50% LTV.....

You have mail


EDIT: Well you would if you accepted emails.

I'm a Mortgage Broker and can sort this for you tomorrow if you require, drop me an email

Edited by Sarnie on Saturday 29th October 22:59

[stanwan]

Sarnie said:

stanwan said:

Hi folks,

I am having a real nightmare trying to sort out a remortgage with First Direct. I'm self employed and wish to agree a mortgage in-principal.

10 years a go when I applied for my current offset mortgage, they were happy with my self-assessment returns. Now they are asking for fully audited accounts from an accredited accountant. Unfortunately, my accounts are not audited (I wish i earned enough to make it a necessity).

First direct refuse point-lank to organise mortgage unless the accounts are audited. THey have suggested get them retrospectively audited but I have no idea how much this would cost? Are there other options I could consider?

I'm surprised they are being so inflexible considering my existing mortgage is already paid off an I am going for 50% LTV.....

You have mail


EDIT: Well you would if you accepted emails.

I'm a Mortgage Broker and can sort this for you tomorrow if you require, drop me an email

Edited by Sarnie on Saturday 29th October 22:59

Emails now accepted!

[Eric Mc]

groak said:

Ask them if they'll accept an SA302 from the tax office. That should work.

Under the Self Assessment system, most people do not receive these SA302s (Tax Calculations). Indeed, legally they have very little standing. Unlike the old Inland Revenue Tax Assessment", the "Tax Calculation" is not an agreed determination of your income and tax liability.

This was perhaps the single biggest change brought about by Self Assessment. Lenders often used to ask to see Inland Revenue Tax Assessments, as they had a legal standing (just like a P60). SA302s do not have that same status and in effect, prove nothing.

The only people who generally receive SA302s are -

people who submit their tax return before 31 October and therefore expect HMRC to carry out the liability calculation

people who have self calculated or have used an agent/accountant to carry out the calculation but have made such a fundamental error in the calculations that HMRC have been forced to amend and recalculate the liability

Therefore, for those who submit their returns correctly and perform their liability calculation correctly, it is unlikely that they will receive an SA302.

[groak]

Eric Mc said:

groak said:

Ask them if they'll accept an SA302 from the tax office. That should work.

Under the Self Assessment system, most people do not receive these SA302s (Tax Calculations). Indeed, legally they have very little standing. Unlike the old Inland Revenue Tax Assessment", the "Tax Calculation" is not an agreed determination of your income and tax liability.

This was perhaps the single biggest change brought about by Self Assessment. Lenders often used to ask to see Inland Revenue Tax Assessments, as they had a legal standing (just like a P60). SA302s do not have that same status and in effect, prove nothing.

The only people who generally receive SA302s are -

people who submit their tax return before 31 October and therefore expect HMRC to carry out the liability calculation

people who have self calculated or have used an agent/accountant to carry out the calculation but have made such a fundamental error in the calculations that HMRC have been forced to amend and recalculate the liability

Therefore, for those who submit their returns correctly and perform their liability calculation correctly, it is unlikely that they will receive an SA302.

http://www.accountingweb.co.uk/anyanswers/how-do-we-get-sa302

http://www.accountingweb.co.uk/anyanswers/how-long...

http://www.rightmortgageadvice.co.uk/blog/2011/01/...

http://www.mycashmatters.co.uk/mortgage-advice/mor...

....and a 1000 more references. This 'SA302' thing is flavour-of-the-month demand from lenders to the self-employed currently....as any mortgage adviser can tell you.

[Eric Mc]

The key thing is that most self assessment individuals will have to ask specifically for it. It is not issued automatically by HMRC in most cases - unlike the old Tax Assessments.

Whether it is flavour of the month or not does not change its legal status as a document. If lenders think that it is the self employed equivalent of a P60 they are very much mistaken.

[Steffan]

Eric Mc said:

The key thing is that most self assessment individuals will have to ask specifically for it. It is not issued automatically by HMRC in most cases - unlike the old Tax Assessments.

Whether it is flavour of the month or not does not change its legal status as a document. If lenders think that it is the self employed equivalent of a P60 they are very much mistaken.

Entirely correct. Excellent advice.

The problem is that the lenders are not intelligent educated resourceful professionals. They are lemmings in their approach which is precisely why we had the 2008 Banking crisis. The lenders are easily misled. En masse. As we have seen before.

The cynics might say that another disaster is beckoning. Probably correctly

[Eric Mc]

In any cases where clients of mine have been trying to borrow, NONE of the lenders have asked to see SA302s. What they ALL have asked for are Accountant's Cerificates - which, of course, I am more than happy to provide.

[groak]

Eric Mc said:

In any cases where clients of mine have been trying to borrow, NONE of the lenders have asked to see SA302s. What they ALL have asked for are Accountant's Cerificates - which, of course, I am more than happy to provide.

I'm sure any mortgage adviser will affirm the current common lender requests for the sa302.

However, while it's very interesting to hear how happy you are to provide your clients' lenders with AC's, of what relevance is this for the OP and how does it help the OP, who's made it about as clear as it's possible to make it that he can't obtain one of those? His accounts are done by his friend. ANYONE can 'do' accounts. And in his case they're being done by someone uncertificated,it appears. So why shouldn't Stanwan try asking if they'll be happy with an sa302 like so many lenders are requesting these days? That would seem a rather more practical suggestion than telling him to get a certificate he can't produce.

[Eric Mc]

I was talking in general terms rather than in direct response to the OP's particular question.

If he needs an SA302, then he should go ahead and request one if he hasn't been issued with one already. As I said, HMRC do not usually issue them and most people will need to make a specific request to HMRC to obtain one. I've no idea how long it takes for HMRC to send one of these things out but knowing their normal performabce, I wouldn't say it was likely to be speedy.

[scratch pervert]

Eric Mc said:

I've no idea how long it takes for HMRC to send one of these things out but knowing their normal performabce, I wouldn't say it was likely to be speedy.

2 weeks on average for the last few that my clients have requested.