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How a Self-Employed Mortgage Advisor Can Help You

Are you self-employed and looking to buy property or land?

More and more people in the UK are choosing to be self-employed, whether they own a business, are a contractor or a sole-trader. For many, this can complicate the mortgage process. Lenders worry about the impact of what they consider to be an unreliable income, as their concern is whether you’ll be able to meet your monthly mortgage repayments. 

Our approved mortgage advisers will help you make the right decisions when it comes to finding the best mortgage to fit your needs. Our self-employed mortgage experts are ready to help you make the most of your money with guidance tailored for your situation. Contact us today to make sure you’re not missing out on the best self-employed mortgage options.

Getting a mortgage when you’re self-employed or a contractor is very similar to when you’re employed, but some lenders will not accept your application because they don’t see you as having a reliable income. Working with a self-employed mortgage advisor can help to find the best deals for your circumstances and lets you know what information you’ll need for an application.

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Frequently Asked Questions...

A mortgage is a loan used to purchase property and land. When you buy property or land, you will typically put down a deposit and use the mortgage loan to make the rest of the payment. Mortgages are repaid over a long period. 

If you’re self-employed, it can be more of a challenge to get a mortgage because you’ll need to prove you have a reliable income. But getting a mortgage when you’re self-employed is certainly not impossible. Speak to a mortgage advisor to understand the best option for you.

Mortgage advisors, often called mortgage brokers, are very useful at helping you understand the mortgage process and finding you the best mortgage for your circumstances, especially if you’re self-employed. Often, mortgage advisors can provide you with options that are not available should you enter the mortgage process yourself.

A mortgage adviser can be helpful when making any mortgage application. However, mortgage advice for self-employed individuals can be particularly useful due to stricter application criteria. Speak to a mortgage advisor to start the process of finding the best mortgage for your circumstances.

If you’re self-employed, it is possible to get a mortgage, even if you have a bad credit score. Although, you will likely pay a higher interest rate. There are many options available for people with bad credit, and a mortgage advisor will be able to help you assess the best options.

There are plenty of ways to prove to a mortgage lender that you have a reliable income. This can include:

  • Two or more years’ certified accounts.
  • SA302 forms or a tax year overview (from HMRC) for the past two or three years.
  • Evidence of upcoming contracts (if you’re a contractor).
  • Evidence of dividend payments or retained profits (if you’re a company director).

As with any mortgage, it’s likely that you will also need to provide other documents such as ID, bank statements and utility bills. A self-employed mortgage specialist will be able to advise you on the required documents and help you to assess the best mortgage option for your circumstances.

Most lenders ask for at least two years’ worth of accounts to prove a reliable income. Different rules apply depending on your employment status:

  • Self-employed – Lenders usually require the last two or three years of accounts. These should ideally show your income, expenses and business operating costs. It is likely that you will also need to provide three months of business bank statements. 

If you file a self-assessment tax return, lenders may require additional evidence.

  • Partner – Business partners are likely to be treated similarly to self-employed borrowers. However, mortgage lenders may look at your share of the business profit when calculating what to lend to you.
  • Limited company directors – Technically you are not self-employed, as you are an employee of your own company. However, you may face similar issues to self-employed borrowers. 

This could be because your income could be irregular, or made up of a combination of salary that you pay yourself and dividends. Lenders usually consider both components. Like a self-employed borrower, you will need to provide at least two years of company accounts.

  • Combination – If your employment status is a combination of the above, you may fit some mortgage lenders’ bespoke contractor terms. A mortgage broker will be able to help your application if you have complex income sources.

Speak to a mortgage advisor today to discuss your circumstances, and find the best option for you.

Several factors affect the mortgage sum you can borrow if you are self-employed. This includes your deposit funds and your income. Typically, you can borrow up to 4.5 times your annual salary provided you meet the criteria.

A mortgage advisor will help work out how much you can borrow and advise you on the best rates.

If you’re self-employed, it can be more of a challenge to get a mortgage because you’ll need to prove you have a reliable income. But getting a mortgage as a contractor or when self-employed is certainly not impossible. Speak to a mortgage advisor to understand the best option for you.

As long as you provide enough evidence and information about your income, your mortgage shouldn’t be more expensive than one for someone with a comparable income in a permanent, full-time job. 

The mortgage rate you are offered is much more likely to depend on the size of your deposit, as well as your credit rating. A mortgage broker specialising in self-employed applications will be able to help you access the best mortgage rates possible for your circumstances.

The simple answer is yes. It is possible to get a mortgage when one applicant is self-employed. However, whilst the non-self-employed applicant can follow a normal mortgage application process, there are stricter criteria for self-employed applicants. This includes providing evidence of reliable income and other financial evidence for the mortgage lender. 

 

A regulated mortgage broker for self-employed people can advise you on your joint mortgage application and help you to get the best mortgage rates for your circumstances.

A self-certified mortgage, also known as a self-cert or self-certification mortgage, was a type of mortgage that enabled individuals to borrow from lenders without having to prove their income.

Self-certification mortgages, which let self-employed people declare their income without needing to provide evidence, were banned in 2014. However, it is still entirely possible to get a mortgage if you are self-employed. 

The current mortgage process for self-employed individuals can be more of a challenge as you’ll need to prove you have a reliable income, but it is not impossible. A  mortgage broker specialising in self-employed applications will be able to advise you on the best options for your financial circumstances as well as which documents you need to be able to prove your income.

The more years of financial records you have, the more likely it is that lenders will be willing to consider your application. A good starting point is two-three years of financial records, although it is possible to get a mortgage with less than that. You may find that with fewer years of financial records, your choices in lenders are greatly reduced. 

A deposit of around 10% of the property’s price is expected, although a larger deposit will benefit you. You will also need a larger deposit if you only have one year of financial records or a history of credit issues. 

There are also situations where you can have a deposit of less than 10%, such as with a scheme like the Help To Buy initiative.

A deposit of around 10% of the property’s price is expected, although a larger deposit will benefit you. You will also need a larger deposit if you only have one year of financial records or a history of credit issues. 

There are also situations where you can have a deposit of less than 10%, such as with a scheme like the Help To Buy initiative.

For sole traders and partners

The amount you can borrow depends on how you supply the information to lenders, whether they are taking net profit or total income. This depends on whether you use accounts or supply them with your SA302s. 

They use this information to work out your average income over the amount of time you’ve supplied records for and multiply it by the appropriate income multiplier. This becomes how much they can offer you. 

For limited company owners

This can be slightly more complex as limited company owners have different income structures. This is because many limited company owners will pay themselves a small salary and then draw the rest of their income from dividends, leaving money in the company as a way to invest in its future. 

This can mean that a company’s profitability is not reflected in the owners’ earnings, which is then not reflected in the lender’s offer due to the multiplier not reflecting the true state of things. This has caused the creation of a slightly different lending model for limited company owners, which takes into account the profitability of their business. 

Speaking to a specialist mortgage adviser is the best way to find out what our options are and what information you’ll need to provide to lenders.

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