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gruffydd

1 Million Self Cert Anyone?

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Since 2000 the number of self-employed in the UK has risen by from 11.8 per cent to 12.7 per cent of the total workforce. Since 1997 the number of new business start-ups has increased by 31per cent in London and the South East alone.

Whereas many individuals within this market earn significant sums of money overall, their income may not be consistent month by month due to bonus payments and commission for example. This means that compiling Proof of Income information can be time consuming – they can’t just produce wage slips or a P60 like those applying for a mainstream mortgage.

Therefore for applications where a Self-Certification product is appropriate for the borrower, there is no requirement for traditional proof of income, speeding up the process for the broker and borrower.

Bull.

Montly income variations are totally irrelevent.

There's a thing called accounts and tax returns.

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Just because the number of new business has increased doesn't mean the owners have become wealthy overnight. I have a friend who runs his own business, thinks himself a hotshot who would jump at this (and lie in the process to get it). He's so thick he doesn't realise that his accounts are available from companies house.

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Montly income variations are totally irrelevent.

There's a thing called accounts and tax returns.

If you are buying a house in December 2005, your most recent tax return and set of accounts may be for the 2003/04 tax year, relating to dates up to two years and eight months ago. A lot may have changed since then, and it is not sensible for either the bank or you to rely on it to establish your income level now for mortgage purposes.

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If you are buying a house in December 2005, your most recent tax return and set of accounts may be for the 2003/04 tax year, relating to dates up to two years and eight months ago. A lot may have changed since then, and it is not sensible for either the bank or you to rely on it to establish your income level now for mortgage purposes.

yes a lot may have changed (their profits could be lower)

if they dont know how much profit they are generating should they really be borrowing significant amounts of money.

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if they dont know how much profit they are generating should they really be borrowing significant amounts of money.

It's not a question of what they know, it's what they can prove. They may know their profits have doubled, but not have the tax returns and accounts to prove it. Hence, self-cert.

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It's not a question of what they know, it's what they can prove. They may know their profits have doubled, but not have the tax returns and accounts to prove it. Hence, self-cert.

In a speculative market place where lenders make big commissions on loans the policy is "ask no questions tell no lies" know what I mean like? When the market turns the Shylocks will close up their suitcase and run for the nearest back street.

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It's not a question of what they know, it's what they can prove. They may know their profits have doubled, but not have the tax returns and accounts to prove it. Hence, self-cert.

Just curious zorn, what do you do for a living, are you in the property or lending business?

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It's not a question of what they know, it's what they can prove. They may know their profits have doubled, but not have the tax returns and accounts to prove it. Hence, self-cert.

Perhaps because their tax returns don't paint a true and honest picture... pay low taxes, it means your income is low and hence the amount you can legitimately borrow. If your income rises, so should your taxes (and the amount you can borrow). If you want to deceive the IR but still want a mortgage - no worries! Self-cert can help you out! Why else go for a self-cert?

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Guest Bart of Darkness

It's not a question of what they know, it's what they can prove. They may know their profits have doubled, but not have the tax returns and accounts to prove it. Hence, self-cert.

I'm still not convinced. If profits have doubled in a year (tax returns being filed every year) then you only have to wait 12 months at the most to prove your increased income (in the next tax return).

Or am I missing something here?

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I was offered a mortgage in the first year of my business - no returns were available and any accounts could easily have been made up. They signed off on 5.5x based on my word alone.

As it happens I made what I said I would make, but the income was so irregular (today I received my first income since October) that I would have been in cash-flow trouble with those 5.5x payments in some months.

Just say no.

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I'm still not convinced. If profits have doubled in a year (tax returns being filed every year) then you only have to wait 12 months at the most to prove your increased income (in the next tax return).

Or am I missing something here?

No you're not missing something.

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Lots of businesses start. A fair number don't survive long.

Restaurants are a particularly good example of this.

It's not easy establishing a longterm successful business.

Cashflow is all. Many otherwise good businesses have failed because of cashflow problems.

To take on a large self cert mortgage with a young business is, imo, very unwise.

When I was involved in business startups my partner with a good employed postion easily supported our mortgage.

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I been in business for several years and my net profit has been around 20K. The Halifax seems to take this figure when I enquire about a mortgage last year (2005). I went to the Halifax to prove to my wife that even as contractor I could get a mortgage. One thing that was interesting as that they was pushing interest only mortgages as a way reduce mortgage payments.

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Guest magnoliawalls

Does anyone know if the increased risk to the banks will be priced into the self-cert mortgage offered?

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  • 302 Brexit, House prices and Summer 2020

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      • down 5% +
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