Self employed mortgages
Getting a self employed mortgage can be difficult. Theoretically a self employed mortgage is no different to regular mortgages however they are more complex because as an applicant, you’ll need to provide more information for lenders to consider. This is because your earnings are not as easy to track as those who are employed.
Getting a mortgage when you’re self employed
As a self-employed customer, you still have access to the same mortgage products as everyone else. As a specialist mortgage broker, we can make it easier for you to access these products.
Self employed documents
To be considered for a self employed mortgage, you must provide:
- Two years worth of accounts
- Evidence of your earnings through a SA302
- A full trading history
If you don’t have everything here, there’s no need to be concerned since there are some lenders who will consider your application based on the information you can provide.
Furthermore, it helps your application if you have a good deposit because this will lower your Loan to Value (LTV). Your credit rating will also be a factor, but if you do have a bad credit history, we will still consider your application.
Using a mortgage broker
Mortgage brokers have the benefit of hosting a number of mortgage lenders on their panel. Using a broker saves you time and effort in searching for a lender that will consider your application. Clever Mortgages deals with specialist lenders and will go over your situation and advise on the best way forward for getting a mortgage in place, at the best rate available to you.
Does my business type affect my application?
Depending on the type of business you have there are some things to be aware of in your application.
If you’re a sole trader, you’ll most likely need to supply a tax self-assessment. The HMRC can do this calculation for you, and as a result, you’ll receive an SA302. This shows the income you have received and corresponding tax that is due.
As a partnership, you need to be aware of the share of the business profit you receive. This is so the lender can review the business accounts and see the money you receive from the total business income.
As an owner of a limited company, you are typically an employee of the company that receives a salary as well as a profit dividend. It’s important that you make sure the accounts that you submit reflect both salary and dividend to give the lender a true reflection of your income.
Using an accountant
Many self employed firms use an accountancy firm to manage their yearly accounts and quite rightly so, their expertise is invaluable to ensuring your returns are accurate and on time. Your accountant can also be very useful in your mortgage application.
Firstly, your accountant is best placed to collate all the information you need for your application. They have easy access to your accounts and tax returns. Also if they hold chartered status, many lenders will accept the accounts they provide as evidence of income.
In addition, it’s important to be aware that historically, you and your accountant may have looked to reduce your income in order to pay less tax. Naturally, this may affect your mortgage application as it shows you earning less than what may be realistic.