SELF EMPLOYED
If you are self-employed, rest assured that you have access to plenty of great mortgage deals – there are just a few more hoops to jump through before being approved. Self-employed mortgage criteria may be a little different, and mortgage providers typically require more detailed evidence of your income. That’s why it’s important to seek advice from an independent mortgage broker whose knowledge of the market can help you find the best self-employed mortgage deal for your circumstances.
Can I get a mortgage if I’m self-employed?
Absolutely, you can get a mortgage if you’re self-employed. Many lenders are comfortable lending to self-employed applicants, although they will likely make a more thorough assessment of your affordability and will tailor their underwriting to suit.
What is a self-employed mortgage?
A self-employed mortgage is simply a mortgage that’s designed for individuals whose income comes from running their own business. It caters to those who have varying or fluctuating income patterns and may not have traditional payslips or PAYE employment history. That includes sole traders, contractors, freelancers and company directors.
Lenders have specific criteria and assessment methods for self-employed individuals to determine their eligibility and affordability.
Is it more difficult to get a self-employed mortgage?
It’s true that getting a self-employed mortgage has unique challenges compared to ‘traditional’ mortgages. Lenders consider self-employed people as higher risk as they have less assurance of a reliable income. So you will find that a mortgage lender will scrutinise your application far more closely and will ask to see financial records as evidence of income stability.
How will I be assessed as self-employed for a mortgage?
Your income and affordability for a mortgage will be assessed differently compared to traditional employees.
A mortgage lender will typically review the following documentation to assess your ability to meet the monthly repayments.
- Business accounts – 2 or more years, typically supplied as copies of your signed financial accounts.
- Personal Tax documents – Likely 2 years’ tax calculations (SA302’s) and tax year overviews.
- Bank statements – Latest 3-6 months personal and business bank statements to look at income and outgoings of both the business and its shareholders.
- Credit rating – A good credit score can go a long way to reassuring a lender that you are a reliable borrower. Check your credit report here.
Lenders may also consider factors such as your business’s longevity and future prospects.
Self-employed first-time buyer mortgages
Applying for a mortgage as a first-time buyer is daunting enough, even more so when your income comes from self-employment. But, contrary to what you may think, being a self-employed first-time buyer in no way disqualifies you from getting a mortgage. However, lenders do have additional considerations and requirements compared to traditionally employed applicants.
You will have access to the same mortgage rates as traditional borrowers, and lenders will assess your income, credit history, and affordability to meet the mortgage repayments, just like any other applicant. However, you will likely be required to gather a little more documentation as proof of your self-employed income, such as your tax returns and bank account statements.
Remortgages for the self-employed
Remortgaging as a self-employed applicant follows a similar process to applying for a mortgage, which can prove a burden if you’re snowed under with running your own business. As your mortgage broker, we can guide you through the remortgage process and help lighten the load.
We’ll help you to calculate the equity in your current property and the loan-to-value ratio. We will also make a thorough assessment of your personal finances and long-term financial goals to find the most appropriate deal on the market. What’s more, we’ll do all of the necessary admin so that you can get back to running your business.
