Mortgage for self employed
Discussion
Hi all,
I was wondering if anyone could help/advise me please? I have a current mortgage but have become self employed in the past 7 months, however i am not just a sole trader. I have joined a well established GP practice as a partner. I have been told by my bank that to get any decent mortgage then I will need 2yrs of personal accounts ( 1yr is possible but rates etc are not great).
Now I can show the bank the business accounts, including all of the partners' drawings etc for the last 15yrs+ if they want it and so prove what a partner has been earning and therefore what I will reasonably expect to earn. Apparently this is not good enough and it has to be my personal accounts.
This seems a bit silly to me but I can only get to speak to someone on the end of a phone who will not listen to my reasoning at all and seem to just read from a script. Obviously this may just be the rules and there is nothing that I can do but I would like to move as our house is too small for us now.
Does anyone know of any lenders that would consider me? I would have thought that although I am technically self employed, I basically work for the NHS which I would hope would be seen as a reasonably safe job.
Many thanks, and I hope you all have a good new year.
GB
I was wondering if anyone could help/advise me please? I have a current mortgage but have become self employed in the past 7 months, however i am not just a sole trader. I have joined a well established GP practice as a partner. I have been told by my bank that to get any decent mortgage then I will need 2yrs of personal accounts ( 1yr is possible but rates etc are not great).
Now I can show the bank the business accounts, including all of the partners' drawings etc for the last 15yrs+ if they want it and so prove what a partner has been earning and therefore what I will reasonably expect to earn. Apparently this is not good enough and it has to be my personal accounts.
This seems a bit silly to me but I can only get to speak to someone on the end of a phone who will not listen to my reasoning at all and seem to just read from a script. Obviously this may just be the rules and there is nothing that I can do but I would like to move as our house is too small for us now.
Does anyone know of any lenders that would consider me? I would have thought that although I am technically self employed, I basically work for the NHS which I would hope would be seen as a reasonably safe job.
Many thanks, and I hope you all have a good new year.
GB
You are technically NOT self employed. being a partner in a partnership is not "self employment" - it is being a partner. Legally, they are different.
How are you remunerated in the partnership?
Are you taxed on a salary under PAYE?
Are you taxed on a share of partnership profits?
Are you taxed on a combination of both?
How are you remunerated in the partnership?
Are you taxed on a salary under PAYE?
Are you taxed on a share of partnership profits?
Are you taxed on a combination of both?
Eric Mc said:
You are technically NOT self employed. being a partner in a partnership is not "self employment" - it is being a partner. Legally, they are different.
How are you remunerated in the partnership?
Are you taxed on a salary under PAYE?
Are you taxed on a share of partnership profits?
Are you taxed on a combination of both?
If you have more than a 20% stake in a business, for mortgage purposes, you are self employed.How are you remunerated in the partnership?
Are you taxed on a salary under PAYE?
Are you taxed on a share of partnership profits?
Are you taxed on a combination of both?
To the OP, do you have a stake higher than 20%?
And what if he receives the bulk of his partnership income through salary under PAYE?
Some partners do - especially Associate Partners who have to go through a salaried "associate" stage before becoming full equity partners.
The OP needs to be a bit more specific about the nature of his involvement in the partnership for us to know his true status..
Some partners do - especially Associate Partners who have to go through a salaried "associate" stage before becoming full equity partners.
The OP needs to be a bit more specific about the nature of his involvement in the partnership for us to know his true status..
Eric Mc said:
And what if he receives the bulk of his partnership income through salary under PAYE?
It will still come back to what percentage of the business he has. Less than 20% and its simply pay slips and personal bank statements required. More than 20% and it will be two years worth of SA302's required...Sarnie said:
If you have more than a 20% stake in a business, for mortgage purposes, you are self employed.
To the OP, do you have a stake higher than 20%?
thanks for the replies so far.To the OP, do you have a stake higher than 20%?
There are 6 partners in the business and we take our monthly salary in drawings. I am not a Dr so in monetary terms I take 87.5% of the drawings of a full time GP. I have to buy into the practice with about £12k to build up my personal current account. Does that answer your question enough? (I am assuming that you mean my stake in the business being 1/6th or do you need more financial info in which case I can get figures from the accountant)
thanks again
Eric Mc said:
So you are an equity partner and not a salaried partner being taxed under the PAYE system?
Do you get a payslip every month showing tax and NI deducted at source?
Will you get a P60 at the end of the tax year?
No, I do not get a payslip, my earnings are just deposited into my bank as 'drawings' and the accountant draws up tax etc at the end of each financial year so as far as I am aware I will not have a P60 at the end of the yearDo you get a payslip every month showing tax and NI deducted at source?
Will you get a P60 at the end of the tax year?
gingerbeard said:
No, I do not get a payslip, my earnings are just deposited into my bank as 'drawings' and the accountant draws up tax etc at the end of each financial year so as far as I am aware I will not have a P60 at the end of the year
You're self employed then I'm afraid.........you will need to provide two years worth of HMRC documentation to evidence your income, with the majority of lenders, some will want three years.oh Balls! Looks like I'm stuck then, oh well, at least I have a house. Have to go on more holidays instead!
When you say changes are on the horizon, are they likely to be bad ones or does no-one have any idea yet?
Thanks to everyone who has replied, I am most grateful and I hope you all have a good new year
When you say changes are on the horizon, are they likely to be bad ones or does no-one have any idea yet?
Thanks to everyone who has replied, I am most grateful and I hope you all have a good new year
Joy! Just what I need, more taxation! At least it is worth it for the great quality of our roads, our super efficient health system with no wait for operations or restrictions on medications, our clean streets and well staffed Police force keeping us all safe 
Back OT, why is it that lenders will not look a business accounts when this is obviously how the partners earn their money? It seems crazy to me
Back OT, why is it that lenders will not look a business accounts when this is obviously how the partners earn their money? It seems crazy to me
gingerbeard said:
Joy! Just what I need, more taxation! At least it is worth it for the great quality of our roads, our super efficient health system with no wait for operations or restrictions on medications, our clean streets and well staffed Police force keeping us all safe
Back OT, why is it that lenders will not look a business accounts when this is obviously how the partners earn their money? It seems crazy to me
Because they are not lending to the other partners, they are lending to you. They can't base your lending decision on what others have earnt historically.Back OT, why is it that lenders will not look a business accounts when this is obviously how the partners earn their money? It seems crazy to me
As Sarnie said, it's YOUR personal income history they are interested in and any changes in circumstances - such as a switch from salaried employment to income based on a share of business profits - provides a cut off in your personal income history.
Circumstances are just as important as income levels and your circumstances are now radically changed, so the "old" history of salaried income is of no real value for a lender when trying to predict your future income and risk profile.
Circumstances are just as important as income levels and your circumstances are now radically changed, so the "old" history of salaried income is of no real value for a lender when trying to predict your future income and risk profile.
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