Mortgages for non-guaranteed bonus / self employed

[mutsy88]

Hi all,

I am just starting to look into buying my first house (probably looking at mid-2017) and have been trying to calculate what my wife and I could borrow for a mortgage.

The difficulty I am having is that my wife is self employed and roughly a 3rd of my annual income is in the form of performance related bonuses. Whilst I am good at my job and am confident I will continue to get these, they are not guaranteed.

I work in finance so have always been prudent when budgeting, meaning we can live comfortably on my guaranteed salary alone and don't rely on bonuses or my wifes salary to pay the bills. On this basis I'm also comfortable we could afford monthly mortgage repayments of £1,100 a month without any changes to our lifestyle and still leaving a sensible margin for savings etc.

The question I was hoping you could help with is if I am looking for a 90% LTV mortgage as a first time buyer, how should I present my earnings and who is likely to look most favourably on our situation?

Any help greatly appreciated.

[Sarnie]

mutsy88 said:

Hi all,

I am just starting to look into buying my first house (probably looking at mid-2017) and have been trying to calculate what my wife and I could borrow for a mortgage.

The difficulty I am having is that my wife is self employed and roughly a 3rd of my annual income is in the form of performance related bonuses. Whilst I am good at my job and am confident I will continue to get these, they are not guaranteed.

I work in finance so have always been prudent when budgeting, meaning we can live comfortably on my guaranteed salary alone and don't rely on bonuses or my wifes salary to pay the bills. On this basis I'm also comfortable we could afford monthly mortgage repayments of £1,100 a month without any changes to our lifestyle and still leaving a sensible margin for savings etc.

The question I was hoping you could help with is if I am looking for a 90% LTV mortgage as a first time buyer, how should I present my earnings and who is likely to look most favourably on our situation?

Any help greatly appreciated.

How long has your Wife been self-employed? if more than two years when you come to apply you can use her income.

With regards to how to present your figures.....you present them exactly as they are........the key is how much you need to lend and whether you need a lender who will take 100% of your additional income or not....

[mutsy88]

Sarnie said:

How long has your Wife been self-employed? if more than two years when you come to apply you can use her income.

With regards to how to present your figures.....you present them exactly as they are........the key is how much you need to lend and whether you need a lender who will take 100% of your additional income or not....

She has been self employed for 5 years and her income has been pretty stable during that period showing slight YoY growth but nothing major. A colleague suggested that taking the average of her last 3 years income is a common approach by lenders but I have yet to test this.

I think a minimum of 60% of our additional income would need to be taken into account and have no idea if this is a realistic aim. at the other end of the scale 100% would push the monthly payments too high and leave us reliant on bonus etc.

[Sarnie]

mutsy88 said:

She has been self employed for 5 years and her income has been pretty stable during that period showing slight YoY growth but nothing major. A colleague suggested that taking the average of her last 3 years income is a common approach by lenders but I have yet to test this.

I think a minimum of 60% of our additional income would need to be taken into account and have no idea if this is a realistic aim. at the other end of the scale 100% would push the monthly payments too high and leave us reliant on bonus etc.

Average the last two years self employed income, that'll be fine.

With regards to your bonus income.....only you can decide how much you need/want to borrow.....that will then dictate which lenders you would be able to apply to....