Self Employed Mortgage

Self Employed Mortgage

The definitive guide to a Self Employed Mortgage.

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Can you get a mortgage if you’re self-employed?

It is a bit of a minefield when you are getting a self employed mortgage. Lenders view things very differently to each other. You may have been self employed for a year, or 10 years. Covid-19 has only made this issue worse, with lenders changing criteria. Below we discuss some of the common queries we get with regards to Self employed mortgages.

When you’re self employed you may find it harder to get a Mortgage

You may find it hard to get a mortgage as a self employed person. Proving your income is more complicated than just showing the lender a few payslips. Whilst more of a challenge, it’s still very possible to get a mortgage. If you are considering getting a mortgage it may be best to speak to your Bank or a specialist mortgage advisor before you do to go through your options.

What are self-certification mortgages and do they still exist?

Self employed people often struggled to prove their income. If you were self employed you could tell the lender how much you earned without needing to provide evidence. This was self certification.

Unfortunately you can no longer get ‘Self certification’ mortgages. Self certification was banned in 2011 as many that got this type of mortgage wouldn’t actually be able to get them under today’s guidelines.

What counts as self-employed?

Sole traders, limited company directors, contractors or other self employed people all count as self employed and would apply for a self employed mortgage. We have a specific article for Directors here.

How do you get a self employed mortgage?

In theory you are able to apply for the same mortgage products as everyone else. For a self employed mortgage some lenders view different things more favourably than others. The best outcome will really depend on your situation as there aren’t any particular mortgage products for self employed. It’s always best to speak to your Bank or a specialist mortgage advisor before making an application.

Can I get a buy to let while self employed?

We are specialists at getting Buy to Let mortgages for the Self employed. You can probably get one just as easily as an employed person. This is because for a rental property lenders are mainly concerned with the property and how much rent it will get. We’ve done a whole article on this here.

What will I need to provide for a self employed mortgage?

Generally lenders will want to see your latest years tax calculation and tax year overview, most will want 2 years worth. You can find out how to get these here – Guide to download your self employed documents

Lenders also prefer to see your accounts prepared by a qualified, chartered accountant. Before applying speak to both a mortgage advisor and your accountant so that your accounts and your mortgage application are packaged correctly for what you are trying to do.

Do self employed people have to pay higher mortgage rates?

Not really, no. As I mentioned above, you are eligible for the same products as everyone else. The rates you are able to get are much more likely to be based on your credit history and loan to value. The more deposit you can put in the lower your rate of interest generally.

How to boost your mortgage chances

Before you apply for a self employed mortgage it’s a good idea to get yourself in the best position possible.

  • Get in touch with a mortgage broker, they can find the right lender to suit your situation.
  • Have a chartered accountant prepare your accounts – Lender’s like this a lot.
  • Check your credit rating, there’s lots of free services out there.
  • Save, save, save! Save as much deposit as you can.

Can I remortgage as a self employed person?

Of course! Being self employed won’t harm your chances of being able to remortgage, you’ll be able to do it the same as everybody else. However lenders will review your documents like any mortgage application. Therefore you’ll need to have your accounts sorted and an application packaged correctly.

I have debts, does this mean I can’t get a mortgage?

Not at all, we work with lenders that will accept debt, even if it’s adverse credit like defaults or CCJ’s, they are certainly out there, and may even be on the high street!

When you have debts it’s important to check your credit file, for this we recommend Checkmyfile, you can do this here.

How long do I need to be self employed for? 

This depends on the lender, but some will lend to you with a single year’s accounts. Most will require two or three years of accounts, and will take an average, some will take your latest years figures.

Can I use my Grant or Bounce back loan as a deposit?

Most lenders expect a deposit to come from savings, but it varies from lender to lender, some might and I can assure you some definitely will not.

How many years do I need to have been trading to get a mortgage?

This depends on the lender, but some will lend to you with a single year’s accounts. Most will require two or three years of accounts, and will take an average, some will take your latest years figures.

How much can I borrow for a mortgage?

This is a complicated one. The answer is, you can usually borrow as much as an employed person. This can vary from lender to lender, so get in touch. Often we get asked for a mortgage calculator, but they are wildly inaccurate. It’s far quicker and easier to do this over the phone. If you wanted to know how much you can borrow a quick 10 minute phone call and we could tell you. We’d even tell you which lender will likely be the best to do it with.

How do they work out mortgages for self employed?

Generally they work out how much you can borrow the same as an employed person, you just have to provide more evidence. So an employed person provides up to 3 months evidence usually. For a self employed mortgage you may have to provide up to 3 years evidence.

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