Self Employed with One Years Accounts

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Self-Employed Mortgage with One Years Accounts  

It can seem daunting applying for a mortgage when you are self-employed, especially if you do not have two to three years of accounts to prove your income. It is not impossible to find a mortgage if you only have a years’ worth of accounts, but it is going to be more difficult.

There are mortgage lenders who are becoming more flexible towards the self-employed, but you may need to seek help from a Mortgage Advisor to find the right mortgage for you.

Can I get a Mortgage if I have one year of accounts?

If you can wait to provide two to three years of accounts this may be worth doing to access preferable rates from an increased number of lenders. There are options for you if you have only been trading for a year and are looking to invest in property.

It is important that you have been trading for at least a whole tax year to be able to provide tax documentation to your lenders. There are specialist lenders if you do not have a whole years’ worth of trading behind you, but you will need to look deep in the mortgage market for them.

How do I prove my income with only one year of accounts?

As a sole trader you or a member of a partnership a lender will look at your share of the net profit or the total income received on a self-assessment tax return (SA302 forms). If you are a Limited Company director then lenders will look at your salary and any dividends or retained profits stated on accounts or references.

The reason you need at least a years’ worth of accounts is so the lenders can assess the latest year of income and the taxes you have documented with a qualified accountant. You need to look into what is required alongside your mortgage application as every lender has different requirements to fit.

How much can I borrow? 

The amount that you will be able to borrow will highly depend on your current financial situation. If you have a good credit score and good financial history then you can access up to five times your annual salary. If you can prove that you are on a higher income some lenders will allow you to borrow more.

If your credit score is low and you haven’t been trading for a year, you could always approach a lender with an income projection. This is an estimate of a yearly income figure based upon the months you have been actively trading.

It is very important to remember that lenders will vary in the criteria they need you to fill and it is always worth looking into this before approaching them. It is advisable to seek the help of a Mortgage Advisor to help you go through all of your options.

What deposit will I need?

You will need at least a 10% deposit which is standard across types of residential mortgages. If you are buying a new build or are a first time buyer then you could give a deposit as low as 5%.

There are flexible lenders out there who offer lower deposit options if a deposit is something you are stressing over. It is advisable to approach lenders with as much of a deposit as you can use this to prove your enthusiasm to borrow.

Is Help to Buy available for the Self-Employed?

You can access Help to Buy schemes if you have a years’ worth of accounts; this means that you can buy with only a 5% deposit and the Government will give you another 20% to put towards it too. There are limited lenders who will consider self-employed help to buy mortgages so you may need to search for them or seek the advice of a professional Mortgage Advisor. 

How can a Mortgage Advisor help?

A Mortgage advisor has knowledge of the independent mortgage market and can gain access to a lot of lenders and mortgage products that high street lenders will not offer. Advisors can help with the mortgage process from start to finish, helping find the right mortgage products for your needs.

Here at First Thought we are appointed representatives of Quilter, who are authorised and regulated by the Financial Conduct Authority (FCA) so we can help with finalised accounts and mortgage advice for a range of employed borrowers. We know what is needed when it comes to obtaining a mortgage and can find the right options for your personal circumstances. 

Your home may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.

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