Purchasing when self employed

[Humpty Dumpty]

Hi all.

When I purchased my first home I was a PAYE employee. Now, as I look to purchase a subsequent house I am self employed. To my knowledge, it is part of the criteria of banks to have 2 or 3 years of accounts. My question, how is this calculated for purchasing power? Is it the final year account that is considered, I.e, 100,000 would provide 3.5/1000,000 = 350,000, or would it be the mean of the 3 years accounts?
Thanks

 

[ClubMan]

This key post is 10 years old so I'm not sure if it's still up to date?

Key Post - Getting a mortgage if you're self-employed

It's no secret that it's more difficult to get a mortgage if you're self-employed than it is if you're PAYE. Here's a few facts and pointers. It would be great if others could add to it with real-life experiences. In general, banks will look for at least 3 years' audited or certified...

www.askaboutmoney.com

 

[llgon]

Is it the final year account that is considered, I.e, 100,000 would provide 3.5/1000,000 = 350,000, or would it be the mean of the 3 years accounts?

My experience is that the rules are less hard and fast for the self-employed. A lot will depend on how stable and predictable the lender believes your future income will be. The best approach would be to approach the lender or a broker with a figure that you require and see whether it is realistic.

 

[myate]

Bought my first house when I was PAYE & self employed. This was before '08 crash, so they only cared about Paye & were giving money away!
Sold that & bought again in 2017 when I was fully self employed, for over 10 years. I was asked for 3 years accounts, probably the norm. We sold again, & bought in 2019, always looking for a similar size mortgage if not lower than before, but this time, I was asked for the 3 years accounts, but also a letter from my accountant stating that the current year looked in a similar way to the previous years accounts. That wasn't a problem for my accountants, and my business was such I could look ahead & see what would be coming in. Just found it strange.