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He currently has a mortgage of £75,000 and believes his property is worth £250,000. He wishes to borrow a total of £162,000. His only commitments are £250 each month and he would like to continue on a repayment mortgage over a 25-year term.
Roger Taylor is director of sales at SPML
“Mr Wright has a number of options available to him as part of his application, and due to his current employment circumstances, his best course of action is to opt for a self-certification mortgage deal.
When considering a mortgage application, SPML does not use rigid income multiples but an affordability calculation, which takes more factors into account when assessing the maximum loan available for applicants. This can allow SPML to lend more than traditional income multiples, where the borrower can demonstrate adequate affordability.
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SPML accepts income from multiple sources and would allow an applicant to self-certify their self-employed income as long as they had been self-employed for six months.
Based on the facts given about Mr Wright and his partner’s income and financial commitments, and on the basis that they have no recent adverse credit or missed payments, we could lend the requested amount on our almost prime two-year fixed rate self-certification product, which has two options:
- 5.74 per cent with a £795 arrangement fee, or;
- 5.29 per cent rate with a 1.5 per cent arrangement fee.
SPML also offers the option of an automated valuation model to speed up the mortgage process.”
Michael Brill is director at Baronworth Financial Services
“There are very few lenders who will consider anyone who has been self-employed for less than 12 months. Some lenders are sympathetic if the self-employment is a continuation from being employed in the same industry. However, I presume that this is not so.
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Of the few lenders who will consider less than 12 months self-employment, most would reject the case as it does not fit their affordability criteria.
SPML would consider the case; however, it does work on affordability.
It appears that Mr Wright has only been self-employed for seven months, so there is no way of assessing whether the business will be successful. Under these circumstances, and taking into account the new couple’s modest income, increasing the mortgage to this extent could be financial suicide.
Mr Wright could sell the property and purchase a small flat, until the business is more settled. This should enable him to release sufficient equity for his wife, although it would be very costly, as he would have to pay estate agent fees, Stamp Duty, and moving costs, and would certainly not be a ‘quick fix’ arrangement.
An alternative option would be to ask his wife to wait six months, at which time, more lenders would consider the case, as he would have more than 12 months self-employment, and he would have a better idea as to the success of his business.”
