Fiona Curtin is product development manager at Mortgage Express
“Valerie would typically be able to borrow £93,750 on a standard mortgage, depending on lenders’ income multiples, as her additional income could not be taken into consideration. This would undoubtedly limit her choice of property in today’s market.
Valerie would need to consider a self-cert deal to be able to include her salaried income as a parole officer and her income from being a DJ when determining the amount she will be able to borrow against the property. This would enable her to borrow up to £233,750.
If Valerie chooses a self-cert route, it will be important that she ensures she makes provisions to maintain her mortgage payments in the months ahead, putting money aside for potential dips in her DJ work. Anyone taking a self-cert mortgage should carefully consider their expected future income, as well as their present, and factor in any potential rate rises that may impact on their ability to meet their mortgage payments.”
Darren Pescod is managing director for The Mortgage Broker Ltd
“Valerie could potentially borrow four times her income with Platform on a 95 per cent self-cert deal or with Intelligent Finance (IF) on a 95 per cent status deal. A range of products from fixed to discounted would be available to her.
This would mean a mortgage of up to £220,000 on a purchase price of £232,000 allowing her £12,000 to be used as a deposit. As Valerie’s income is irregular and not guaranteed, it would be wise to only borrow an amount that she felt she could afford on a month to month basis and this may well be far from the £220,000 available to her.
The IF deal would be available providing her accountant could verify her last year’s trading income on a signed income certificate. The Platform deal would be available if she has an accountant that would verify she trades self-employed or if she did her tax return last year.”
Alan Lakey is a partner at Highclere Financial Services
“Assuming Valerie has no outstanding credit and has the necessary fees in addition, then, using affordability models, she could borrow around £160,000. As her self-employed income has only recently increased, this will not be reflected in any accounts, so she will need to use a self-cert facility if she wishes to utilise it for a larger loan.
Platform’s near-prime range offers a 95 per cent self-cert facility. This would allow her to borrow £220,000 based around four times income and her 5 per cent deposit.
While this appears obtainable, it means borrowing to the limit of her capacity and using all available capital. It also assumes that the £30,000 is net and not gross income.
More realistically, Valerie should consider a loan of up to £160,000 which should ensure that her finances are not overly stretched.”
