We talk to a corporate trainer, 31, about the difficulties she faced getting a lender despite having a £90,000 deposit and six figure income.
Welcome to Home Truths, the tell-all series where homeowners and renters spill the beans on what really goes on behind the scenes when buying, moving or renting a property.
Moving story at a glance
Job: Corporate trainer
Combined household income: £120,000
Home cost: £599,999 for a three-bedroom flat
Deposit paid: £90,000
Mortgage payments: £2,283
Mortgage interest rate: 2.48%
What’s your home like?
It’s in a Victorian mansion block with twenty flats in the block. It has three-bedrooms and a study, which we need because we’re now going to be working from home for the foreseeable. I talk all day long for my job, so we desperately needed separate offices.
The building has a large kitchen and dining area with exposed brickwork. It’s got lots of character, with a fireplace in every room. It’s very shabby chic, so we’ve had to do a little bit of work and there’s more to do. It has a little balcony just off the living area.
When did you move in?
We found the flat in August 2020 and had our offer accepted. But it took ages to get a mortgage approved and for all the other paperwork to go through, so we finally moved in in January 2021.
Why Forest Hill?
We moved from a two bed rented flat in central London. The rent on that was £1,900 a month, which was quite a lot but we were right there in the centre, and knew we were paying for the privilege of just being able to walk into work.
How do you make your new home work financially?
We split everything exactly in half, so we both put £45,000 in savings towards our deposit. Our earnings are almost equal, even though my income is more irregular because I’m freelance, so we pay 50:50 each month. We were very conscious that we didn’t want to take any money from our families and have spent years saving up our own money for this.
There’s a reason we paid just £1 shy of £600,000 for that flat. It’s because mortgage lenders start wanting you to have a 20% deposit if you go above the £600,000 value threshold, and we only had a 15% deposit (so our mortgage was 85% loan to value).
We knew we couldn’t hit £600,000 or we’d have found it impossible to get a loan. The solicitors and all of the people involved in the sale got really irate about the fact that it was that figure, rather than rounded up, and it probably took them a bit longer to work everything out.
How easy was it to get a mortgage?
Very difficult. We must have gone to see our first mortgage advisor in October 2019 and he pretty much laughed us out of the office, even though we'd saved about £60,000. He said banks wouldn’t touch me with a barge pole because I’m self-employed.
So we kept saving up and then, just before we found our flat, Covid-19 happened and all my corporate training work dried up. This meant I took the first Self-Employment Income Support (SEISS) payment. But then, work I had only been able to do in person before the pandemic could suddenly be done online, and after a couple of quiet months I began to be inundated and my earnings bounced right up again.
In the meantime, we’d been recommended a new mortgage broker and he was great. He knew immediately which lenders wouldn’t touch a self-employed person like me, and we got a mortgage agreement in principle.
When we found the flat, we made an offer and tried to lock in the mortgage, but because I’d taken that first SEISS payment (I haven’t taken any of the others, obviously) the lender made me practically beg for a mortgage.
It felt like the agreement in principle wasn’t worth the paper it was written on, because over several months I had to fill out extra paperwork and write a letter to the mortgage lender explaining that I had more work now, that my business wasn’t going under. I did that twice to separate lenders and in the end they both said no.
It was really demoralising and I felt like I was letting my boyfriend down, because if I had an ordinary job this wouldn’t have happened.
Anyway, I did an emergency tax return and didn’t claim any expenses for the simple reason that I needed to look as profitable as I possibly could. There were a lot of legitimate tax deductions that I just had to leave in order to try and get this mortgage through.
Our broker approached a third lender and after the same rigmarole of forms and letters we finally got it approved. So it was a mixture of luck and perseverance, but it took months and it was so stressful. I can’t understand why it felt like these lenders had never dealt with a self-employed person before when there are 4.37 million self-employed people in the United Kingdom.
None. We love it here. I just wish it hadn’t been such a fight to get to this point.
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