Mortgage with two good and one bad years accounts

Apr 30, 2005 3 Replies
K

I need to get a mortgage and now have been self employed for four years and just about to get my third set of accounts from my accountant.



My figures will be starting with the oldest first



Year one profit 43,750 Year two profit 10,000 Year three profit 45,000



My business is one where the cash flow is like steep mountain range and wondered if lenders may average the figures out? Especially in view of the middle year.



How will a lender calculate the maximum loan and any ideas what it would be. Whilst my income is now good I am still struggling to get a deposit saved and all the legal costs. I still only have 5% unless I save longer but am getting desperate to have my own place.



Help would be good!



Ken


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T

You need accounts for the fourth year to make sense of this "trend". Are you sure your profits are really this up and down? You are employing a qualified accountant? What happened in year two?

I would expect mortgage lenders to ask these sorts of question rather than simply plugging the figures into an "average".

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K

My income is made up from cheques of an average of 4,800 each (max 11,000 minimum 2,500) and the problem is that they come in here and there. So one month may have several and another month none. This is what happened in the middle year - I was still busy but the pattern of 'cheques in' fell just before the start of that year and then into the next year. If my year ends had been different the figures would of looked much more consistent.

Ken

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Your accounts shouldn't mirror the pattern of 'cheques in', they should mirror the pattern of 'work done' When payment arrives is an irrelevance.

Your accountant is an idiot so get another accountant (Chartered or Certified) and get him to produce the fourth year of accounts. He will quickly be able to redraft the previous three years to show the figures the mortgage lender should see.

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