How to get self-employed mortgage?

While buying a property is a dream come true, many self-employed individuals find themselves worrying about getting mortgages. Many self-employed borrowers go through challenges while finding a lender and applying for a mortgage. However, getting a First time mortgage  or Remortgage while being self-employed is not as difficult as it seems.

Before moving on admittedly, it is difficult for self-employed borrowers to get mortgages compared to salaried individuals. Even if your bank account shows an ample enough balance, you may struggle more than a salaried professional with a lower income. This is because most mortgage lenders look for financial stability through a steady income.

Despite having good bank balances, self-employed individuals are often viewed as risky borrowers compared to salaried professionals. This makes it difficult for these individuals to get suitable mortgage deals.

However, there is always a silver lining to such circumstances! As long as you work with the right ortgage brokers and connect with the right mortgage lenders, you can get the best Remortgage Deals suitable  while being self-employed. All you need to do is find a reliable Local Mortgage Broker  to get started.

For example, if you are a self-employed borrower in London and wish to buy a house in London, look for a Mortgage Broker London. This professional will help you find the right lenders and give you a deal that best suits your circumstances.

What Makes You Self-Employed?

Before knowing how you can get a mortgage while being self-employed, it is important to know what self-employed exactly means. In the UK, mortgage lenders will consider you self-employed if you own over 20% – 25% of a business, making it your primary income. Contractors, company directors, and sole traders are all counted as self-employed individuals.

How Do Mortgage Lenders Assess Self-Employed Borrowers?

Mortgage lenders assess different self-employed borrowers differently:

Limited Company Owner

If you are the owner of a limited company that is registered, you are likely to pay your dividend and salary. As you apply for a mortgage, a lender will pay more attention to the revenue your business generates and the income you get out of it.

Business Partner

If you operate as a partner of an established and registered business, mortgage lenders will want to see your share of the profits in the company.

Sole Trader

Mortgage lenders will classify you under the sole trader category if you work as a freelancer or a contractor. Under these circumstances, you will be required to fill out a tax self-assessment. An accountant will then need to undersign this document before moving forward. Finally, your mortgage lender will ask for an SA032 form and a Tax overview to verify your income.

How to Get a Mortgage While Being Self-Employed?

If you are self-employed, the process of getting a mortgage is the same as a salaried professional. The only difference lies in the lenders you approach and the criteria that you qualify for a mortgage.

Salaried professionals often provide lenders with their contracts and salary slips as income proof which show a steady income. This assurance is missing in the case of self-employed borrowers, meaning they produce other documents to qualify for their mortgages.

Before you apply for a mortgage as a self-employed borrower, you have to have a look at your personal and professional finances. Your personal finances determine the savings for your family, the debts you have, and your ability to make monthly mortgage repayments. Your professional finances refer to the taxable income you receive that helps you make your repayments.

Can I get a mortgage If I’m Self-Employed?

Yes you can get a mortgage if you meet the criteria being Self-Employed.

To become eligible for a mortgage while being self-employed, you need to be either:

• Limited company’s director
• Being a partner in a partnership
• Trade as a sole trader

Once you approach a mortgage lender, they will assess your application based on your occupation and position

Irrespective of your occupation, you will need to provide lenders with proof of your income to convince them about your affordability and capability to pay off your mortgage.

Here are the most important documents you will need while applying for a mortgage as a self-employed borrower:

• If you are Contractor: If you are a contractor and have work coming up over the next few months/years, it’s better to show its proof to your mortgage lender. This will give them the assurance of your income over a specific time period. Our Contractor mortgage guides all you need to know.

• If you are a Sole Trader, your Self-Assessment: If you are a sole trader then you will have to do your self-assessment at the end of the tax years. After the self-assessment, HMRC issues proof of income which is called SA302 form that shows your income and the taxes you have to pay.  The SA302 is accompanied by a Tax Overview which shows if taxes are paid in full or not. The SA302 and Tax Overview will give the mortgage lender an idea about your income, which will  show you can afford to make regular repayments based on the money you have earned and the taxes you have paid.

• If you are a Limited Company, show company accounts: If you thinking of company director mortgage , a mortgage lender will want to see how much you pay yourself in the form of a salary or the dividend you pay to the shareholders. Our how to prove income as company director has all you need to know.

Along with these documents, mortgage lenders will predict the trajectory of your profits over time. If you are a contractor, they will see how steady your payments have been with time. At the end of the day, mortgage lenders want to ensure that your income allows you to pay the mortgage on time.

Some of the FAQs:

What Documents Do I Need To Provide For Self-Employed Mortgage?

If you are working as sole trader or limited company, you will need last 2 years tax calculation and tax overview along with ID and proof of address.

Many mortgage lenders ask for accountant certificate and company accounts too.

Our expert self employed mortgage broker can assist you with your mortgage documents. Get in touch with MariannaFS to start your self employed mortgage.

Do Self-employed Borrowers Pay Higher Mortgage Interest Rates?

This is not always the case. While a few mortgage lenders may offer mortgages with a higher interest rate , this will normally only happen if 2 years of your income proof are not ready. However, you can always get a normal mortgage deal while being self-employed. All you need is an experienced mortgage broker to guide you in the process and lead you to the right mortgage lenders.

Can I Get Mortgage With 1 Year’s Account?

Most of the mortgage lender will require 2 years accounts to see your business is established. But if you have less than 2 years account it is possible to get a mortgage from few lenders who would consider your 1 year’s accounts for mortgage.   Talk to us to see how we can help with obtaining a mortgage on 1 year’s accounts.

Self employed with bad credit can I get mortgage?

Yes, you can have a mortgage with bad credit. The fact that you been self-employed can make it a bit difficult to prove to the lender that you have a steady flow of income.
Things get more difficult if you are self-employed with bad credit. The mortgage approval depends on factors such as,
How long you are being self-employed for,
Your deposit amounts.
The level of your bad credit.

How To Improve Your Chances Of Getting Mortgage When Self Employed ?

Work with mortgage advisor– Self-employed clients should seek expert mortgage advice in improve their chances of approval. Mortgage broker can help you to understand the process, find the best lender you’re your circumstances.

Work on your finances – Make sure your credit report check regularly. You should pay everything you owe on credit cards. Close the accounts you no longer use.

Bigger deposit – Having a larger deposit can help to secure good mortgage while you are self-employed.

How MariannaFS Can Help Self-employed?

Whether you are a first-time buyer or have some experience landlord with BTL , you need not worry about getting a mortgage as a self-employed borrower.

Our friendly team of mortgage brokers are some of the highest rated mortgage expert. We are proud of 5 star customer rating we have achieved over the years. All mortgage broker with MariannaFS are FCA regulated and have necessary qualifications.

Many high street lenders do not prefer complex income like company directors with 12 months or Sole trader with 1 years accounts  But specialist lenders can offer mortgage with right mortgage deal for self employed

With access to whole of market which enables us to find best mortgage deal for Self-employed. Just complete contact form and we be in touch.

Related Mortgage Guides

35 Years Mortgage Guide  

Contractor Mortgage Guide 

Income For Company Directors 

First Time buyer Mortgage Rates 

Mortgages For Company Directors