Self Employed Mortgages
Working for yourself shouldn’t stop you from buying your dream home! Our experts have secured mortgages for 100’s of self employed customers.
Self employed mortgages
A self employed mortgage is just a normal mortgage but for someone who is classed as self employed. The same products are available for self employed people as they are for employed people, however some lenders do offer special products for self employed people who meet certain conditions.
If you are self employed you will need at least 1 years worth of trading history and 1 full years worth of company accounts or a personal tax return. Although some lenders will consider 1 years self employment for a mortgage most require 2 years to show that your income is sustainable.
Who do lenders class as self employed?
Lenders typically class you as self employed if you are a sole trader, own more then 20 or 25% of a limited company or are in a partnership with someone else. The different structures are looked at in different ways by banks:
Sole Trader
For a sole trader lenders will usually assess your profit from self employment shown on your annual tax calculation (SA302).
Limited Company Director
As a limited company director you will usually pay yourself a salary and dividend payments and that is what lenders will take into account for your earnings.
If you keep profit within the business some banks can assess the company accounts and base their lending on your salary and share of any net profits but not all lenders will do this.
Partnership
If you are set up as a partnership then your share of any profits will be used by lenders to provide a lending amount.
Is it harder to get a mortgage if you are self employed
It can be more difficult to get a mortgage if you are self employed, especially if you don’t know where to look.
Different lenders will assess your income differently but they will all want to see that your income is sustainable so that you can afford the mortgage.
Unlike someone who is employed, self employed income can vary from month to month and year to year.
Some lenders will look at your latest years profits or income, some will average the last 2 or 3 years. Others will look at the profit of the company if it’s a limited company and even if profits remain in the company. These are just a few of the considerations but there are a lot of other things that banks and building societies take into account when making a decision on your mortgage application.
How to get a mortgage if you are self employed
Mortgage broker for self employed
The best way to improve your chances of getting a mortgage if you are self employed is to speak to an experienced mortgage broker. You can do it alone but choosing the wrong lender could cost you both time and money.
A mortgage broker will be able to assess your circumstances, the way your business and income is structured and choose the right lender for you.
Whether you need to use your latest years income as you’ve had an up turn in business and need to use profits retained in the business a broker will be able to advise on the right lender.
An experienced broker will also be able to position your application with the lender in the best way to improve your chances of being accepted.
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