My boyfriend was told by his bank recently that he earns more than enough for the mortgage we want, but that he will need to provide 2 years worth of book-keeping from his business (yes…2 years!!!!!!!!) in order for us to get the mortgage based on his income. This is a huge blow, as he has only recently become self-employed, meaning we’d have to wait until 2012 to buy somewhere.
His circumstances are unusual in that although he is now self-employed, he is continuing to work for the same company (a large oil company) as he has done for the previous 3 years. However, since going self-employed he has been given a substantial pay increase and also no longer has agency-type companies taking a cut from the money the oil company pays for his work. This means we cannot use financial evidence from before he went self-employed as we would get a much lower mortgage. We have a large deposit and he is now earning a very healthy salary so it is infuriatuing that we’re being told we have to wait 2 years, considering an employee of a company can get a mortgage based on a few months payslips.
The bank he visited (Clydesdale) suggested we return in 6 months and bring evidence from the company he works at stating he’s been there for so many years etc but that basically they could makes no promises that they’d let up on this 2 year thing. Can anyone at all advise on any other banks or services that we could use to get a mortgage sooner, based on our circumstances? Many thanks for any suggestions!
The issue for us is my boyfriend is not going out touting for work like most self-employed people who can’t guarantee their monthly income. He is doing the same job, in the same company as he has done for over 3 years. He has a contract with them as he had before, only now they pay his business rather than him as their employee. I’m just wondering if any banks will consider this factor.
As for our personal circumstances, rather than squander money on rent, my boyfriend and I chose not to live together so we could save for a deposit, which we have done very successfully. We want to live together before marriage and have discussed legal issues regarding if we should split or one of us should die. We’ve been together for over 5 years and buying a house is the next step for us before marriage and children. This 2 year wait is a huge set back for us.
Buying a home with a boyfriend is not a good idea. Unlike buying with a spouse, you do not have the same legal rights, nor do you have access to the court system to work out a fair solution if you split up. If you are willing to take on a 15 or 30 year mortgage, then marriage should be on the agenda first. Otherwise, you definitely need a contract that sets out what becomes of the equity in the home, and who will reside in the home if you split.
Self employed people definitely should bank locally so they have a good relationship with their banker, who has a stake in the well being of the community. If he has a written Contract to provide work for his former employer with a set minimum income for a year, and can put 30% down payment on a reasonably priced home, a community bank may be able to walk an application through the process.
Continue to rent and build more savings while establishing a strong history with the company as a contractor, and building a relationship with a local bank. Buying a home is a huge long-term commitment so setting out a written timetable on how to get to the point where you can buy a home together is going to be in your best interest.
Instead of being infuriated, consider that these roadblocks may be blessings in disguise. It gives you both time to know more about what it takes to be self employed, and develop a plan for your future.
I personally really don’t see any way around this. They are wanting these records with the fact that they want to see if there is a risk or not, and how "established" the company is that he has built up, and what sort of productivity that it will have.
I know that it seems a little harsh, but the banks need some sort of "security or knowing" that they are going to get all of their money. Unless your boyfriend can pay up front the "entire" amount of the money immediately, they are going to need a paper trail to make sure that "all" of the payments will be there for on time.
I hope that this helps explain this situation to you, feel free to contact me if you need more information, or if you would like me to explain it in a bit of a different way.
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STOP!!! Do not purchase a house with someone that you are not married to. I repeat do not purchase a hosue with someone you are not married to. It does not always end well, I know I know but you guys are different. That is exactly what everyone says. Do everyone a favor and wait the two years and hopefully you will be married and then you can live happily ever after.
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Buying a home with a boyfriend is not a good idea. Unlike buying with a spouse, you do not have the same legal rights, nor do you have access to the court system to work out a fair solution if you split up. If you are willing to take on a 15 or 30 year mortgage, then marriage should be on the agenda first. Otherwise, you definitely need a contract that sets out what becomes of the equity in the home, and who will reside in the home if you split.
Self employed people definitely should bank locally so they have a good relationship with their banker, who has a stake in the well being of the community. If he has a written Contract to provide work for his former employer with a set minimum income for a year, and can put 30% down payment on a reasonably priced home, a community bank may be able to walk an application through the process.
Continue to rent and build more savings while establishing a strong history with the company as a contractor, and building a relationship with a local bank. Buying a home is a huge long-term commitment so setting out a written timetable on how to get to the point where you can buy a home together is going to be in your best interest.
Instead of being infuriated, consider that these roadblocks may be blessings in disguise. It gives you both time to know more about what it takes to be self employed, and develop a plan for your future.
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Its not going to happen. His PAST employment is irrelevant since it has no bearing on his current ability to make money. This is an industry standard bench-mark since the failure rate for self-employed individuals is so high for the first two years. The risk is just not worth it for the bank. I have no doubt that your husband might be very successful AND be better off now, but you have to put yourself into their shoes. With over a 80% failure rate for self employed individuals for their first 2 years, would YOU lend a few hundred thousand bucks to someone knowing that there was less than a 20% chance that you would be paid back in full and on-time?
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