Self Employed Mortgages
A lot of people wonder if it’s harder to get a mortgage if you are self-employed. In actual fact it is quite similar, aside from the documents you need to provide to prove your income to a lender.
What counts as Self-Employed?
Lenders will see you as being self-employed if you own more than 15% of the business, from which you earn your income. You could be a sole trader or a limited company director. If you are not sure if you are technically self-employed or not, we will be able to assess your situation to advise whether a lender will class you as employed or self employed.
How do I get a Mortgage?
If you are currently self-employed and you are looking for a mortgage, then you will have access to the same mortgages that other people do. You will also need to pass the affordability tests which are required.
You’ll need to provide evidence that you can afford the mortgage repayments before they agree to lend you the money.
What do I need to provide for a Mortgage?
If you want to prove your income for a mortgage, then you will most likely need to provide:
- Full accounts for the business
- Tax calculations and tax year overviews
- Business bank statements
It will vary lender to lender, on how many of the above they will require.
Most lenders will insist on 2+ years of accounts and tax returns, however if you have less than this, it is still worth a conversation with one of our specialist advisers. They can guide you on what is possible with less, or at the very least give you information on what you need to aim for.
Backing up your Evidence
In addition to income verification you will also need to verify your identity, and personal bank statements.
Do Self-Employed people get offered higher Mortgage rates?
The mortgage rates you get given will depend on your deposit and your credit file. The bigger the deposit that you put down, the better the rates on offer.
It may be that you need to go to a particular lender, based on how they assess your self employed income. This could be a high street lender, or a specialist lender.
How to Boost your Chances
There are a number of steps you can take if you want to boost your chances of being accepted for a mortgage. This can include saving up a bigger deposit as you can, or correcting mistakes on your credit record. Getting on the electoral roll will also work in your favour.
If you have legitimate marks on your credit file, it’s important to make sure you keep a good credit record and make all your payments on time to improve your credit score.
What are Self-Certification Mortgages?
Self-certification mortgages were once designed for those who are self-employed. It gave them the chance to self-certify how much they managed to earn every year and they did not need to provide any evidence at all.
Self-certified mortgages were banned in 2014 and the main reason for this is because there were concerns that borrowers were applying for mortgages that they could not actually afford. This means that those who are self-employed now need to apply for mortgages in the same way that other people do.
How to Find the Right Deal for You
The best way for you to find a good self-employed mortgage is for you to go through a mortgage broker. Our fully qualified advisers understand all elements of self employment, and are fully up to date with lenders criteria, making them the best people to help you with your mortgage journey.
If you are having a hard time getting accepted by a mainstream lender then you may find that using a Broker is the way to go. A Broker can help to boost your chances of being accepted for a mortgage and they can also help you to understand the lending criteria much more. Again a good mortgage broker will have access to deals with specialist lenders and other products that are not available by going to a lender directly.
Of course, if you need some help with your mortgage then please do contact us today. When you do, you can then feel confident knowing that you can count on us to give you all of the support you need while also working with you to give you a good rate for your mortgage. You can contact us by phone or by email to find out more.
Why Use The Mortgage Broker Ltd?
At The Mortgage Broker Ltd, it’s our vision to become the UK’s most trusted and respected mortgage broker. The only way for us to achieve this is by providing straightforward and transparent advice to each and every one of our clients.
From your first call to your last, we put customer service first before all else so you can be confident in getting expert mortgage advice.