Jump to content
House Price Crash Forum
dreamOn120k

Self Certified Mortgages

Recommended Posts

Has the credit crunch killed off the self certified mortgage?

I am out of touch with consumer banking because my previous mortgage was arranged 8 years ago. How would the banking world view the following request?

Applicant: Age 45, owner-Occupier

House value: £250k (very conservative value in popular housing area with lots of transactions)

Current Mortgage: £70k with no redemption penalties

Perfect 8 year repayment record.

Since quitting my job last year I have decided to start a business and would like to fund start-up costs for this from existing equity in my property.

I would like to increase the mortgage to £120k which is around 50% of my home's value.

Share this post


Link to post
Share on other sites
Has the credit crunch killed off the self certified mortgage?

I am out of touch with consumer banking because my previous mortgage was arranged 8 years ago. How would the banking world view the following request?

Applicant: Age 45, owner-Occupier

House value: £250k (very conservative value in popular housing area with lots of transactions)

Current Mortgage: £70k with no redemption penalties

Perfect 8 year repayment record.

Since quitting my job last year I have decided to start a business and would like to fund start-up costs for this from existing equity in my property.

I would like to increase the mortgage to £120k which is around 50% of my home's value.

Self Cert doesnt really exist, in most cases they will require proof of earning via approved accounts.

Provided you have three years approved accounts, I dont see it as a problem, however banks will take the earnings you submitted to the IR, often a very low figure if your accountant is worth his salt.

Share this post


Link to post
Share on other sites
Has the credit crunch killed off the self certified mortgage?

I am out of touch with consumer banking because my previous mortgage was arranged 8 years ago. How would the banking world view the following request?

Applicant: Age 45, owner-Occupier

House value: £250k (very conservative value in popular housing area with lots of transactions)

Current Mortgage: £70k with no redemption penalties

Perfect 8 year repayment record.

Since quitting my job last year I have decided to start a business and would like to fund start-up costs for this from existing equity in my property.

I would like to increase the mortgage to £120k which is around 50% of my home's value.

Frankly, before you go down that route, go and talk to a good bank about a business loan. They may just give it to you with the equity in your house, then you have no need for a mortgage.

Depending what you are doing select your bank carefully.

IMHO, if it is international trade, HSBC is almost a must.

From what i have heard, Lloyds is better for property now.

If it is something else it might well not matter.

Share this post


Link to post
Share on other sites
Frankly, before you go down that route, go and talk to a good bank about a business loan. They may just give it to you with the equity in your house, then you have no need for a mortgage.

Depending what you are doing select your bank carefully.

IMHO, if it is international trade, HSBC is almost a must.

From what i have heard, Lloyds is better for property now.

If it is something else it might well not matter.

The problem you are going to have with a business loan is that should your business not run along the lines of your projected cashflow forecasts, they will call the loan in an instant, if the loan is secured on your property (Which it will be for sure) then you are out of house and home.

I would pursue the Equity Withdrawel path, as opposed to a business loan.

Share this post


Link to post
Share on other sites
Self Cert doesn’t really exist, in most cases they will require proof of earning via approved accounts.

Provided you have three years approved accounts, I don’t see it as a problem, however banks will take the earnings you submitted to the IR, often a very low figure if your accountant is worth his salt.

The problem is from an income point of view I am in the gap between a long term pattern of permanent employment and generating revenue from a new business.

Maybe "self cert" is not the correct phrase in my case. My question is: For someone with an otherwise good credit history, will the banking sector look favourably on a request for equity withdrawal up to 50% LTV without proof of income?

Share this post


Link to post
Share on other sites
The problem is from an income point of view I am in the gap between a long term pattern of permanent employment and generating revenue from a new business.

Maybe "self cert" is not the correct phrase in my case. My question is: For someone with an otherwise good credit history, will the banking sector look favourably on a request for equity withdrawal up to 50% LTV without proof of income?

Had you asked the question a year ago I suspect the answer would be YES, however today I can say with a certain degree of certaintly that the answer will be No.

You need to speak to your current lenders and ask them if you can increase your mortgage, they can tell you over the phone in a couple of minutes as its all pretty much cut and dried, and simplified as the Computer decides on the outcome.

You are in a catch22 as you need the finance to progress your business, yet the current earnings do not support a loan without the investment.

Share this post


Link to post
Share on other sites

if you have a equity in your home set up a limited company to protect your assets, as your home wont be at risk should the business fail.

the best thing to do would be to get a business loan within your company as you have limited liability should it fail (and you cant pay back the loan) however in reality its unlikely the bank will allow this for a new business and will just ask for some security against the loan.

also if you get a business loan dont forget the interest is tax deductible to your business, so you may need to work out which is cheaper depending on the rates you can get and your tax calculations.

Edited by mfp123

Share this post


Link to post
Share on other sites
The problem is from an income point of view I am in the gap between a long term pattern of permanent employment and generating revenue from a new business.

Maybe "self cert" is not the correct phrase in my case. My question is: For someone with an otherwise good credit history, will the banking sector look favourably on a request for equity withdrawal up to 50% LTV without proof of income?

Why not sell your house and use cash. Rent 'til your minted then buy again for less. Win/Win.

Share this post


Link to post
Share on other sites
Has the credit crunch killed off the self certified mortgage?

I am out of touch with consumer banking because my previous mortgage was arranged 8 years ago. How would the banking world view the following request?

Applicant: Age 45, owner-Occupier

House value: £250k (very conservative value in popular housing area with lots of transactions)

Current Mortgage: £70k with no redemption penalties

Perfect 8 year repayment record.

Since quitting my job last year I have decided to start a business and would like to fund start-up costs for this from existing equity in my property.

I would like to increase the mortgage to £120k which is around 50% of my home's value.

Two points to make

1) The chancellor announced an extension to the Small Firms Loan Guarantee scheme. This may be worth examining. Make sure that you fully utilise the excellent resources that are available from business link, http://www.businesslink.gov.uk/ after all you paid for this (in your taxes) might as well make the most of it.

Link to financing assistance

http://www.businesslink.gov.uk/bdotg/actio...8790&r.s=tl

2) Call Abbey and see if they will give you a 'Fast Track' mortgage. I was thinking of doing this out of curiosity to see if these are still available in the current climate. I think my details are fairly similar to your own. This does not require accounts, so its effectively self-cert... just not called that.

BTW, this is really why I STR'd. I decided to switch to my dream career as I'd decided I'd be happier doing what I wanted to do and renting than living as a wage slave in a house of my own.

Edited by 2MeterBear

Share this post


Link to post
Share on other sites
1) The chancellor announced an extension to the Small Firms Loan Guarantee scheme. This may be worth examining.

2) Call Abbey and see if they will give you a 'Fast Track' mortgage. I was thinking of doing this out of curiosity to see if these are still available in the current climate. I think my details are fairly similar to your own. This does not require accounts, so its effectively self-cert... just not called that.

Thanks 2MeterBear I have spent a few hours reading up on your suggestions.

The SFLG scheme is something I will pursue when the business is at the right stage but initial research suggests the scheme is not suitable for seed capital to fund R&D. However I need to read up on the 2008 extensions you mentioned.

The guy who answered my call at Abbey mortgages said he was not allowed to talk to a member of the public directly because he was not allowed to offer financial advice. I will need to follow up via a broker but since I have never used a broker before I do not know what names to trust, if any at all.

Share this post


Link to post
Share on other sites
Thanks 2MeterBear I have spent a few hours reading up on your suggestions.

The SFLG scheme is something I will pursue when the business is at the right stage but initial research suggests the scheme is not suitable for seed capital to fund R&D. However I need to read up on the 2008 extensions you mentioned.

The guy who answered my call at Abbey mortgages said he was not allowed to talk to a member of the public directly because he was not allowed to offer financial advice. I will need to follow up via a broker but since I have never used a broker before I do not know what names to trust, if any at all.

Yes, I forgot, last time I talked to them it was via the Motley Fool's mortgage sales number.

http://www.fool.co.uk/

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 293 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.