When I bought my dream home with a mortgage on my business income, I achieved one of my biggest goals in the past 5 years. It wasn’t easy though. It took four years and there were several roadblocks.
Yet with grit and determination – I made it!
If you are self-employed, I want you to know that it’s possible to get a mortgage on your business income. Later in this article, I’ll be sharing my top tips that will make the process considerably smoother and faster for you than it was for me.
First let me tell you about my Dream Home…
It doesn’t have a swimming pool, tennis courts or a bar, but it has four large bedrooms with plenty of room for my musician partner to have a music production studio, and for me to have my home office. This is quite something given I live in one of the most expensive parts of the UK. My favourite part of the house is the spacious open plan kitchen dining room, which is perfect for entertaining. It took me two years to find a house that ticked all these boxes.
The house has a special magic. After we moved in my partner and I were standing in the garden and a flock of little birds flew down from the roof of our house, circled us and then flew up to the nearby fence. This might sound like the stuff of fairy tales, but I believe it’s part of the magic of this house.
But two years ago my life was far from magical…
I had just started divorce proceedings and I was about to give half my equity to my husband in our divorce settlement even though I had financially supported my husband for the majority of our seventeen-year relationship.
My husband had had a car accident and suffered a head injury eighteen months prior. Our relationship had been on the rocks before his accident. But I chose to stay to nurse him back to health because after 17 years together it was the right thing to do. Plus I still cared immensely for him. It wasn’t easy but by May 2016 his health was almost entirely back to normal and he was able to look after himself again.
On the other hand I wasn’t faring so well…
I hit breaking point…
I arrived home having been away for two weeks looking after my 88 year old Grandmother. When I walked into our home, I nearly walked straight out again. It was an absolute wreck. Let’s just say it rivalled some of the homes you see on the television show “Hoarders”. There were piles of dirty dishes, rotting garbage giving off a terrible stench that made my stomach turn, and a few creepy crawlies who’d made a nest in our kitchen.
With the help of a good friend, I got the courage to contact a lawyer and start divorce proceedings. I wanted our breakup to be amicable – I even paid for my husband’s solicitor. But my husband just couldn’t accept my decision to end our relationship and this made him bitter. He chose to pretend to his lawyers that he didn’t know if he would ever be able to work again.
My lawyers felt that rather than risk a maintenance order from a Judge where I would have to pay my husband maintenance for five years (which could total several hundreds of thousands of pounds), it was better for me to try to get a speedy settlement by giving over half my equity. So long as my husband agreed to the settlement, I would get the decree nisi and be released from our marriage in just six months.
Now even though my business was doing well, I didn’t have the kind of money a maintenance order could require me to pay. Plus, my husband was threatening to go after 50% of my business as well as half my equity. There was absolutely no way I was going to allow that to happen. I followed my lawyer’s advice and agreed to the settlement giving half my equity away.
Around the same time the law changed…
I suffered a second blow to my hopes of getting a mortgage. The UK lenders stopped giving mortgages to people whose income was in euros.
My business was still based in Ireland even though I had moved back to UK in 2015. So my three years accounts were all with euro-based income. This single change to the law meant my hopes of getting a mortgage were turned to dust.
I thought, “Jeez – at this rate I am never going to be able to buy my own home again, let alone my dream home!”.
I went through a short period of feeling like giving up on my dream of getting a mortgage for my dream home.
Yet I couldn’t shake my underlying belief that despite all the challenges, I could find a way.
The Steps That Helped Me Get A Mortage…
I contacted tons of mortgage advisors and got told I wouldn’t be able to get a mortgage by 99% of them. But I ended up with two persistent souls who specialised in getting mortgages for self-employed people.
Tip Number 1 – Find a mortgage broker who works with self-employed people
My mortgage advisors’ advice was stellar…it wasn’t going to be a quick process, but it would be possible.
First of all I got a UK business registered that I could run my business through. I would have to wait a year until I had filed the first years business accounts with HMRC (and had taken my income in Sterling) before I could apply for a mortgage.
My mortgage broker helped me navigate the second step which was to figure out the business revenue and personal income I needed to make to get the size of mortgage I wanted.
Tip Number 2 – Figure out the revenue and income figures you need to get the mortgage you want
My third step was to make sure I hit the desired figures with my business each month. I reviewed my accounts every month with my bookkeeper who helped me keep my costs down and maximise my profits.
Tip Number 3 – Hire a bookkeeper to help you stay on track with your financial goals
By April 2018 I had my accounts filed, a mortgage offer at a good interest rate and had put an offer in on my dream home.
Three months later I’d moved in.
Now the whole saga with getting my mortgage is forgotten. My dream home has more than lived up to expectations. You see it is not just a dream home,…after so many difficult years personally, it is a happy place, a healing tonic, and a place where I am making new memories and new friends. But most of all – it’s a place where I feel at home.
I’d love to hear your experiences with trying to get (and obtaining) a mortgage on your business income, please comment below…
“Shelley is the founder of the UK’s leading provider of online business and marketing training to Coaches. An experienced entrepreneur Shelley has helped hundreds of Coaches, Consultants and Therapists to attract High-Paying Clients and Build Highly Profitable Coaching Businesses”
Shelley Hutchinson, Marketing Expert, clientnectar.com
