Self Employed Mortgage Applications

6 years, 8 months ago by Oliver Atkinson

Is it possible to get a mortgage if I am self-employed?

You can get a mortgage if you are self-employed although there may be a few boxes that you need to tick to satisfy mortgage lenders’ criteria.

You need to get your income verified because all lenders will want to assess your ability to repay the loan.

Most lenders require self-employed people to have been trading for at least three years, and have two years accounts or self-assessment tax returns available.

Some lenders might want to see a prediction of your future clients or contracts, to make sure that you will be able to afford repayments on an ongoing basis.

The best tactic is to shop around, and try and speak to a broker in person because they will be able to talk you through your options, help you find the best self-employed mortgage deal and ensure you meet the requirements for a successful application before you apply.

How is the mortgage calculated?

Most lenders set the amount you can borrow based on your previous two to three years' income. The problem lenders face when deciding how much to lend to a self-employed person often lies in the difficulty of establishing their regular income.

For sole traders and partnerships, lenders take net profits as income.

For limited companies, the lenders look at salary and dividends or in some circumstances salary and net profit of the company.

How can I increase my chances of getting a self-employed mortgage?

The length of time that you have been trading is very important so time your applications according. Try to save a large deposit, especially if you don’t have a long trading history.

Improve your credit rating by paying off debts when they are due and ensure you are on the electoral register at your current address.

Lenders will assess your regular outgoings so keep tabs on food, telephone, gas, electric, water and school bills.

Most lenders require an SA302 form from HMRC in order to prove your income. In addition a tax summary from HMRC which proves you have paid your tax is also often requested.

Can I get the same offers as people that are employed?

There is no reason why being self-employed should limit the mortgage deals available to you and most lenders do not discriminate on this basis.

A healthy deposit, good credit rating and ability to pay will all help you to secure a mortgage if you are self-employed.

The best option is to get your accounts up to date, look at all your options, and make sure that you have the evidence you need to prove that you are able to repay the loan.