Self-employed and looking for a mortgage?

July 24, 2019 - Kevin Dunn

The number of self-employed people in the UK in 2017 was at 4.8 million people*, being self-employed can make it more of a challenge to get a mortgage but it doesn’t need to.

If you’ve got the passion and drive to set up and run your own business, we know you’re going to be busy! So, when it comes to taking out a mortgage, we wanted to make it easier by giving you a heads up on what you may need to consider to help you get the best deal and make it a much smoother process.

Typically, lenders will consider you as self-employed if your income comes from a business that you own more than or equal to 20%. You could be a Sole Trader, Company Director or a Contractor to meet this criteria.

What should you consider?

One of the first things you will be asked for is to prove your income, evidence of this is usually 2-3 years Tax Calculations (or SA302’s) and corresponding Tax Year Overviews for these years. You may also need to provide evidence of upcoming contracts or company accounts. You can get all of these documents from the HMRC through your online account or we can liaise with your accountant directly on your behalf to obtain these for you.

When a lender is working out how much they will lend to you, they tend to use your average profit over the last 2-3 years as your income. This is dependent on how drastic the variations in your income have been over the period.

After October each year, the majority of lenders require the corresponding documents for that year (E.g. 2018-2019 if we were in October 2019) so it’s best that you have your documents back from your accountants before then to make sure you get access to more lenders and get the best deal for you. Not having up to date documentation will reduce the pool of lenders available to you and could provide you with a more expensive mortgage.

What do you need?

As well as the above, you will be asked for the following:

  • Proof of ID
  • Three months’ worth of bank statements to show your income and expenditure

Remember, getting a mortgage if you’re self-employed is not impossible, here are just a few handy tips to help you:

  • Make sure your records and accounts are always up to date
  • Use a certified or chartered accountant to create your accounts and tax return
  • Speak to an independent mortgage adviser for personalised advice and to find the best deal for you.

Our team of independent mortgage advisers can provide access to thousands of mortgages and can help you find the right deal for you, so give us a call now.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. There will be a fee for mortgage advice. The precise amount will usually be between £195 and £495 dependent upon the type of business.