Mortgages for self employed
Often, our self-employed and contractor clients feel there is mortgage discrimination versus an employed client. We fully understand this viewpoint, which is why you need to work with an exceptional mortgage broker who will sympathise and fully appreciate your position and work hard to find a viable solution for you.
You may be a limited company Director with a 25% shareholding and, therefore, be classified as self-employed. You may be taking a basic income and then sporadic dividends in addition. There could well be retained earnings you have left in your business to ensure future growth, and these issues could cause a lender to be hesitant when lending to you – we have seen it all and are in a strong position to expertly guide you through this maze and make your life a little easier!
It is simple to contact us to have a discussion – fill in the form opposite or call us. If you wish to furnish us with a few more details, we can send you a personalised illustration you can do this here
Self-employed
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- We will never charge a broker fee
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What Is a Self-Employed Mortgage?
There isn’t such a mortgage which is purely for self-employed, but there are lenders who cater better for this vast and growing group.
Getting a mortgage can be cumbersome for those who do not have a regular income or are reliant on strong accounts, such as Directors of Limited companies, freelancers, contractors, professionals or those with irregular income or even multiple income methods.
When self-employed, it is best to plan and speak to an independent broker as soon as possible so they can tell you precisely what you may need when considering buying a home.
How can I Get a Mortgage When Self-Employed?
Research your options and seek a reputable, fee-free, independent mortgage adviser. Make sure they have extensive experience in self-employed mortgages. Ask your friends, especially any who may be in a similar position as you, who they used. Check out reviews online – Google is a great place to start.
It is essential you have your documents and financials to provide proof of all income, including tax documents such as payslips, P60s and SA302’s accounts for the last year (ideally two years), and personal and business bank statements. From this documentation, an experienced Independent Mortgage Broker will be able to identify which lenders will be best positioned to give you a mortgage.
While offering our self-employed customers the choice of every lending product would be lovely, many lenders have strict criteria, and many can be more flexible. Ultimately, they all have the same goal and responsibilities to ensure every customer can prove they can afford to make repayments on a mortgage.
I Am a Self-employed Contractor and Have Been in My New Contract for Three Months – Do You Think I Can Get a Mortgage?
Yes, it is challenging but possible. Some lenders will look at your case. An example is if you have previous contracts in the same career and have a particular skill set. A good example is a specialist in IT. Some lenders will take a common sense approach, see that your typical line of work means you move from contract to contract, look at gaps in contracts, and, if they can see a good working pattern, could grant you a mortgage.
How Much Can I Borrow in a Self-Employed Mortgage?
We love dealing with self-employed clients as each has unique challenges. From the Company Director to the freelancer. The main challenge is proving what you earn and what each lender will accept as your income. Some lenders will only accept what you physically take from the company as PAYE and dividends, whereas others may also consider retained profits in addition.
If you are a sole trader, it is vital you have your SA302s and HMRC tax calculations available.
Once we identify what income is acceptable to a lender, they will calculate the maximum mortgage, typically using an income multiple coupled with affordability checks. As each client is different, it is difficult to be precise, but you can crudely work out as your provable income less annualised monthly debts such as a loan payment and times this by 4.5 – some mortgage companies offer more, some less.
Lenders are keen to lend to the self-employed but must demonstrate that the client can afford their mortgage and that they have been responsible when granting it to you.
I Am Employed and Self-Employed. Is This a Problem?
No, not at all. Lenders typically use your multiple incomes, so have payslips/P60s for the employed element and have accounts or SA302 calculations for the self-employed income.
Do I Need a Bigger Deposit as I Am Self-Employed?
Generally not, but the more significant the deposit, the less risk to a lender, which can help their flexibility and common sense approach when granting a mortgage to you. Be aware that the higher deposit, the better the rate could be too.
Do I Need a Bigger Deposit as I Am Self-Employed?
Generally not, but the more significant the deposit, the less risk to a lender, which can help their flexibility and common sense approach when granting a mortgage to you. Be aware that the higher deposit, the better the rate could be too.
As I Have a Big Deposit, Surely I Can Self-Certify My Income?
Pre-2008, many self-employed chose to dodge the income questions by opting for a self-certified mortgage. Despite popular belief, even with this type of mortgage, you should still have had to prove your income. This caused the crash of 2008 (the downfall of many banks) and the subsequent credit crunch as these ‘bad loans’ were sold in the markets and of poor quality.
Post-2008 lenders tightened up their controls and stopped this type of lending. Therefore, and rightly so, any borrower must ensure their income is proven.
I am getting divorced. Can I still get a mortgage when self-employed?
Anything is possible. Divorce is a complex matter, and a mortgage lender will need to demonstrate responsible lending. It is likely there are many variables and affordability is crucial so a lender can make a decision based on risk. It is worth taking a look at mortgages in divorce here
How a Mortgage Broker Can Help Me?
An expert mortgage broker will have experience dealing with self-employed folk. They will know which lenders will accept someone in your position. They will understand how to read your accounts or SA302s and present these in the best light to a mortgage lender. Each case is different; whether you are a first-time buyer or buying an investment property or a holiday home – we are likely to know how to get your mortgage through!
There are literally thousands of mortgage products available, and an expert will understand which lenders to approach based on your precise situation. You can contact us by completing this form here