Self-Employed Mortgages
A Few Things to Know

What is a Self-Employed Mortgage?

There is not a self-employed mortgage, all mortgage products available can be accessed by the self-employed. The difference is in how you are proving your income for PAYE employed people it will undoubtedly be easier for a lender to look into the history of their earnings.

How will your Self-Employed Mortgage be Assessed?

Mortgage lenders want to know that you can afford to make monthly payments on the mortgage that you intend to obtain. Lenders will carry out credit checks and look into your income. You should be providing lenders with all business accounts from the last three years if you can. Proving your income can differ depending on what type of self-employed you are.

As a sole trader or someone who is part of a partnership the figure will be your share of the net profit of the total income received on a self-assessment tax return (SA302 forms). If you are a Limited Company Director, then it will be the director’s salary and dividend received as stated on the account or reference.

How Much can I Borrow?

As with most mortgages the amount that you will be able to borrow will depend greatly upon your own current finances and financial history. Typically, you can access up to five times your annual salary, but this can vary depending on the lender and your credit score.

Lenders will assess you in different ways but every lender will require some years of accounts to prove your income and your tax documentation when you apply for a mortgage. Some lenders will include any retained profits as income yet others will ignore it completely.

Your credit rating is very important when applying for any mortgage, so ensure you have checked your credit score and do everything possible to clear any debt.

There are specialist lenders out there who have products aimed at self-employed applicants – it is worth taking the time to search and scour the mortgage market for exclusive deals or seek the help of a mortgage broker.

What Deposit Will I Require?

You will need to have 10% of the property’s value ready in the form of a deposit as standard with most mortgages. If you are a first-time buyer who is self-employed you can provide a deposit at a lower percentage of 5% by accessing the Help to Buy Government scheme.

The more of a deposit that you can provide – the lower the rate will likely be from the lender. Lenders will offer you lower interest rates if you can give them more of a deposit up front. As you are self-employed ensure you have enough capital for your taxes too at the end of the tax year.

How Can I Boost my Chances of Getting a Mortgage?

The most obvious way to boost your chances of getting a yes is to ensure that your credit has a good rating. If you have a good rating it shows that you can handle your finances and that you are reliable.
Improve your credit by:

• Closing any unused credit cards or accounts
• Using a credit card and ensuring the payments remain up to date can have a beneficial impact.
• Avoid payday loans and using your overdraft
• Keeping up with monthly outgoings
• Make sure your details are up to date on the Electoral Roll
• Ensure you know what finances are in your name
• Manage your debt by paying any off that you owe

If you provide a mortgage lender with a larger deposit you will be more attractive as a borrower too. You can also opt to add a guarantor onto your mortgage or go into it with someone else. You will need to prove that any person(s) on the mortgage can make the monthly repayments.

How Can a Mortgage Broker Help?

A mortgage broker can help you to find the right mortgage deal for you. They will take all of your circumstances into account when delving into the mortgage market and pick out options which will suit your needs.

Mortgage brokers can help you to get your accounts in order and help to budget and plan how much you can afford to be paying back each month. Self-employed clients can access exclusive deals through brokers at times due to brokers building relationships with lenders.
These products can be useful for self-employed applicants, yet it is important to ensure everything is legal and legitimate.

It is important to make sure that you are going to be able to afford the repayments on your mortgage otherwise during your time there your home may be repossessed. Brokers have experience with all types of employed borrowers and are eager to ensure you get the certification for the mortgage you want