What Income do Lenders look for if you are Self-Employed
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What counts as Self-Employed?
You will be counted as Self-Employed if you own more than 25-35% of a business and it is your main source of income. You could be a sole trader, company director or contractor.
What will I need to provide for a Self-Employed mortgage?
The documents that you will need to provide will greatly depend on what category of Self-Employed you fall into. You will have to provide proof of your identity as well as utility bills and bank statements too.
Proving your income as a sole trader
As a sole trader you prefer to go solo so you will need to find an accountant to declare your earnings and sort your taxes out. Lenders will want to see your taxes have been calculated by HMRC through SA302 forms and tax overviews. They will use this information to calculate how much you can afford on a mortgage.
Proving your income as a Company Director
If you have your own company, you should have business accounts as well as personal ones. Usually, you pay yourself a salary and will have money tied up in your business too. You may need a specialist lender if you want your salary and dividend payments to be taken into account in terms of your overall income.
If you do retain profits, it can be worth looking for a specialist lender who definitely takes those profits into account when calculating your mortgage loan.
Proving your income as a Contractor
You will need to provide at least three months worth of personal bank statements as well as business accounts if you keep them separate. You should expect to provide six months if you are going for a higher loan-to-value mortgage.
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Do self-certified mortgages still exist?
There are no longer self-certified mortgages available as they were banned in 2014 due to many being given out to people who couldn’t actually afford to pay them back. They were designed so the self-employed could declare how much they earnt in a year with minor checks involved.
How do you get a mortgage if you are Self-Employed?
You have the same access to the same mortgage products that everyone else can access even if you are a Self-Employed borrower. Your mortgage application will differ in the sense you will have to prove your earnings whereas those on a PAYE payroll system will have a clear paper trail of their income.
You should speak to a Mortgage Adviser to explain your situation and discuss which mortgage deals and mortgage options are going to be right for you. You may require your mortgage lender to allow you to make repayments freely or be flexible in terms of payment breaks, this is best to seek through the help of a mortgage expert.
How do I improve my chances of getting my mortgage application approved?
It is always worth seeking help from professionals who can ensure you are making the right commitments and the most out of your earnings. It is always worth using an accountant when it comes to your taxes as they can help to ensure you have filed them correctly.
You should aim to save for a bigger deposit as the more money you can provide upfront towards your property investment and mortgage the happier the lender will be to allow you to borrow from them.
It is important to have your finances in order before trying to access a mortgage. There are credit checks involved when it comes to your application so if you have any unpaid debts or have missed repayments lenders will be able to see this. If you have a good credit score then you are more likely to access better mortgage rates and rates of interest.
How can a Mint Mortgage and Protection broker help me?
Here at Mint Mortgages & Protection, we are here to help with your mortgage application and offer tailored advice based on your circumstances. We will pick out specialist lenders that will tailor towards your mortgage needs as well as helping with the mortgage application from the documents you will need to hear.
When applying for a mortgage it can be daunting for self-employed people in comparison to PAYE employed mortgage applicants as there are a lot of different products and documents involved. There are products that are not authorised and regulated by the financial conduct authority that can still be accessed as specialist lenders. Even if you have a bad credit rating; here at Mint we will try and find the right options for you.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE