Full time employed, part time self employed, and mortgages..

[Kozy]

Hi everyone, not sure if this is entirely the right place for this thread, but here goes.

I am currently full time employed in a good job, and have been for 5 years. I am looking to buy my first home in the next couple of months. No problems there.

My question revolves around my sideline business. It's a fresh start up, but already potentially turning over a decent amount. I am looking to register as a sole trader, however I want to know how this will affect my mortgage application, bearing in mind that I am still in full time employment. I have read that being part time self employed, some lenders count it simply as being full time S/E and treat you accordingly.

Another option I have is go full time employed, and have my current employer hire me as a contractor. Now obviously this WILL cause problems with my mortgage application by being full time S/E with no history of earnings, but if I could supply the mortgage lender with a contract from my employer stating the situation (basically I am still fully employed by them, but I am sorting out my own tax returns) would that be sufficient as proof of earnings/continuing business, when combined with my previous pay slips?

EDIT: I see this may actually not be possible as Inland Revenue have procedures in place that prevent it?

Edited by Kozy on Tuesday 21st January 13:13

[98elise]

If you become a contractor, then you will not get a mortgage until you have full years trading, and even then your options are limited. You will need two years trading before you can get anything like normal mortgages.

[The Moose]

Get yourself onto a long fixed term mortgage and then go self employed if that's tues route you're interested in!

By the time your fix is up, you won't have any problems getting a mortgage...if you're making money.

[Kozy]

OK Forget the contractor idea for now. I discussed it with my employer and they basically talked me out of it. Whether it was in their interests or mine, I'm not sure, but I've done the maths on it and it's not really worth it.

So, remaining in full time employment, and registering for self assessment, is that likely to cause issues with a mortgage application?

I imagine a business loan would be considered similar to a personal loan at this point? I.e. not a good idea?

[98elise]

Kozy said:

OK Forget the contractor idea for now. I discussed it with my employer and they basically talked me out of it. Whether it was in their interests or mine, I'm not sure, but I've done the maths on it and it's not really worth it.

So, remaining in full time employment, and registering for self assessment, is that likely to cause issues with a mortgage application?

I imagine a business loan would be considered similar to a personal loan at this point? I.e. not a good idea?

SA will not affect a mortgage if you are an FTE.

Just about anyone on the 40% should be doing SA.