Can I get a mortgage if I’m self-employed?
Applying for a mortgage whilst being self-employed can present a few hurdles along the way. As our client base is predominantly self-employed, we thought we’d put together this article to help those looking to get a mortgage and help you get over any hurdles you may come across. All the information in this article has been provided by qualified mortgage brokers.
Firstly, there are no specific mortgage products for the self-employed. The same mortgages that are offered to the employed are also available to anybody that’s self-employed. The main difference is how lenders qualify self-employed borrowers in comparison with those that are employed. For example, employees would simply present payslips in order to prove their income, whereas self-employed borrowers would need to provide accounts.
Top tips on getting a mortgage when self-employed
Lenders will make assessments before they approve you a mortgage, such as credit checks, income and the affordability of the loan. Having the means to prove your income to a lender is perhaps the number one factor when being self-employed. You can prove your income with an SA302 or accounts that have been signed off by an accountant.
It does depend on the lender, as every lender is different in what they’ll accept as evidence of income. If you have a mortgage broker, they will be able to approach the right lenders based on your situation and structure your application accordingly. Lenders usually make assessments on your net profit figures so bear this in mind. If net profit figures vary, which they probably will do, then lenders calculate an average net profit amount, usually using the past three year’s accounts.
What if I’ve recently become self-employed?
There are lenders that will accept accounts for just 1 year, however the majority will require at least 2 year’s accounts. Lenders will often request your SA302 documents, which is a summary of your tax year overview provided by the HMRC. SA302 documents display your declared income and the tax that you’ve paid. Other lenders may request additional information such as full company accounts where applicable.
An accountant can help you with obtaining your SA302 documents, especially if they’ve filed your accounts for you. You can also download your SA302 documents from the HMRC website which is the preferred route. An announcement in 2017 made by UK Finance (formerly the Council of Mortgage Lenders) stated that the HMRC will stop issuing paper copies of tax year overviews and calculations for mortgage applicants. As a result, the majority of lenders will accept online print outs of your SA302 documents.
Can I use more than 1 income stream?
It’s always best to display every income stream when applying for a mortgage. This is because it improves the amount you may be able to borrow. This is particularly useful for when you need a maximum mortgage amount. Other streams of income may include property investments, pensions and trusts for example.
Other factors which can help
Having a larger than average deposit can certainly unlock some great deals. The best mortgage rates tend to start at around 75% loan to value, with 60% loan to value usually offering the best rates. Good credit can also help, but it really does depend on the rest of your criteria to what you’ll qualify for. Even if you’ve had credit issues and only filed your first year’s account, it can still be possible to get a mortgage.
Having a specialist mortgage broker helping you with your mortgage can sometimes make all the difference. Mortgage advisors can search the entire market for you and structure your application before it goes to a lender for assessment. If there any issues with your assessment, brokers can often speak to underwriters to clarify any issues.
Expert Mortgage Advisor specialise in all things mortgages. Whether you’re self-employed, have bad credit or can’t quite find the mortgage deal you’re looking for, their advisors can offer you tailored advice. You can visit the site by clicking the link below.