How do you get a mortgage if you are self-employed?

Getting a mortgage when you are self-employed can be tricky, but it certainly isn’t impossible.

There isn’t such a thing as a “self-employed mortgage” - you will be applying for the same mortgages as anyone else. The main difference is you will be required to provide more evidence of a reliable income.

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

You will be required to provide the same documents as anyone else applying for a mortgage, these include:

  • Passport or diving licence
  • Utility bill
  • Bank statements (3-6 months)
  • Evidence of deposit

Proving your income

Different lenders ask for different documents for self-employed applicants, these could include:

  • 2+ years of certified accounts
  • 2 + years Tax Year Overviews and Tax Calculations

Will I need to pay a higher mortgage rate?

If you can provide proof of your income, and a mortgage lender is confident you are able to make the repayments, you should qualify for the same mortgage as anyone else who is in a permanent role.

The interest rate will depend on other things and not your employment status. A larger deposit generally means a lower mortgage rate, as will a good credit score. The better your credit rating, the more mortgage deals you could be eligible for.

How will my mortgage earnings be calculated?

Sole trader
Lenders will generally look at your net profit over the past two to three years and take an average from those figures.

Limited company
Lenders will look at your share of net profit or your salary and dividends, or sometimes both

Contractor
Some lenders will use your daily rate, subject to your contract meeting their criteria

What can you do to improve your chances of getting a mortgage

  • Get together your Tax documents – you may be able to log into HMRC to obtain these – or if you have an accountant, they will have access to them
  • Use an Accountant – using a qualified accountant to prepare your accounts is sometimes a requirement of the lender
  • Boost your credit score – this can help to get the best deal. Check out how you can do that here
  • Save as much as possible – a bigger deposit opens up more mortgage products and cheaper deals

How to find the best mortgage deals for those who are self-employed?

Using a mortgage broker can be a great idea as they have access to more products than you would if you were to go online or through a bank.

The team at Mortgage Required are specialists in self-employed mortgages, and would be happy to help. Give them a call on: 01628 507477, or email: team@mortgagerequired.com.

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