Despite the various benefits of being in control of your own business, being self-employed can still pose challenges when it comes to obtaining a mortgage. While it is not an impossible task, it can be time-consuming and costly to find the right lender. This is where The Residential Mortgage Hub can assist you. Leveraging our expertise, we will identify the best lender for you and work hard on your behalf to ensure your mortgage application has the highest chance of approval. After all, even the most accomplished business owners need some assistance when it comes to securing a great mortgage deal.
As a specialised mortgage broker, we work with many self-employed individuals, and lenders who specialise in this area. We will guide you through the entire application process to secure you the best deal available and tailored to your specific needs.
Is it harder to get a self-employed mortgage?
Don’t make the mistake of assuming that obtaining a mortgage is impossible when you are self-employed. This misconception couldn’t be further from the truth.
If you have chosen self-employment for its flexibility and freedom, you might encounter challenges in meeting some lending criteria and affordability checks, even if your business is thriving. Fortunately, there is positive news. There are now more lenders than ever offering a wide range of products with different lending criteria and checks. With these options it makes it easier than before to secure a mortgage that is customised to your unique situation. To ensure you find the most suitable mortgage deal, it is crucial to work with a professional advisor like The Residential Mortgage Hub. We can navigate the options available and find the one that best fits your circumstances.
Who can get a self-employed mortgage?
From the perspective of lenders, self-employment is often viewed as a lending risk due to the challenges associated with verifying income. Traditional lenders may assume that self-employed individuals could encounter difficulties in meeting their monthly repayments.
In reality, the mortgages available to self-employed individuals are typically conventional mortgages rather than specialised financial products. However, you can anticipate facing additional requirements to demonstrate your financial eligibility. Once you successfully meet those criteria, the mortgage process becomes smooth sailing.
How are self-employed mortgages calculated?
Various lenders have different criteria when evaluating your eligibility for a mortgage. However, in many cases, they will calculate your suitability based on your average profits. Additionally, lenders may consider your application if you have a solid track record or if you transitioned from regular employment to self-employment as a consultant in the same field.
Typically, lenders assess affordability by averaging your earnings over the past 2 to 3 years based on your accounts. For newly established businesses experiencing rapid growth, it may be more suitable to apply based on the previous financial year to provide an accurate measure of affordability.
Furthermore, if you possess additional collateral or security, have foreign income streams, or can demonstrate secured contracts indicating future profitability, certain lenders may offer favourable interest rates.
How can I prove my income?
In order to obtain any form of financing, it is important to provide evidence of your income. If you are self-employed, there are several common methods to accomplish this:
- Company Accounts: These documents provide a breakdown of your income structure. And include details about retained profits, dividends, director’s loans, and shareholders’ funds. They also present a comprehensive overview of your financial situation at the end of each year, giving insights into your financial well-being.
- Salary and Payslips: These documents offer detailed proof of the salary component of your income.
- SA302: This certificate outlines your income, expenses, gross profit, and net profit for the year. It provides your lender with the necessary information to conduct an affordability assessment. You can download a copy of the SA302 when you file your tax return online.
- Accountant Certificates: Some lenders may value these certificates, which are issued by accountants to verify an individual’s income.
By providing these forms of documentation, you can prove your income and increase your chances of securing a mortgage.
How to improve your chances of getting approved
Lenders don’t solely rely on algorithms and number crunching to make their decisions. As a self-employed individual aiming for success, strategic planning plays an important role.
To increase your chances of securing a favourable deal, it is essential to review your credit score and address any adverse notices. Being registered on the electoral roll can positively impact your credit score. It is also advisable to avoid payday loans as they can create a negative perception of your financial situation. Which can potentially lead to automatic application rejections by some lenders.
Maxing out your credit card limit can have a detrimental effect on your credit score. Instead of making only minimum payments, consider spreading the balance across two cards and explore interest-free deals. Lenders may also request access to your previous year’s accounts or those covering the last 18 months for evaluation. Additionally, it is important to settle all outstanding debts promptly and utilise direct debits to effectively manage your expenses.
Find a self-employed mortgage with The Residential Mortgage Hub
If you are searching for self-employed mortgages, The Residential Mortgage Hub is here to turn your property ownership aspirations into reality. Whether you are a first-time buyer starting your own business or a successful professional, we specialise in simplifying the mortgage application process. Our goal is to remove the burden of searching for the ideal lender and deal, making it a quick and effortless experience for you.
If you require assistance in finding a flexible mortgage lender that saves you both time and money, your search ends right here. Contact our team today on 01634 96811 or book your appointment online. We’ll utilise our extensive experience and expertise to secure the perfect self-employed mortgage tailored specifically to your needs.
Important information
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount will depend upon your circumstances.
The fee is up to 1% but a typical fee is £598.
