Self-Employed Mortgage? - Here's What You Need to Know

If you are self-employed, you may have struggled in the past to find a mortgage.  We help sole traders to find a self-employed mortgage. We use lenders who are used to dealing with business owners so you can get a mortgage without the hassle.

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How to get a Self-Employed Mortgage

There’s nothing better than being your own boss, fully in control of your own business, and answering only to yourself. And yet it can be difficult to try to find a self-employed mortgage for business owners like yourself. 

Business owners can struggle to find lenders who are sympathetic to self-employed borrowers and the whole mortgage process can be frustrating when you are trying to navigate through complex lender criteria. This is where we can help. We can help you find a self-employed mortgage, so if you need our help, click to Get Started. Do you have some questions about applying for a self-employed mortgage? Take a look as we answer the most commonly asked questions.

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Why do Self-Employed Borrowers Struggle to get Mortgages?

Trying to find a self-employed mortgage can be undeniably difficult with many business owners finding themselves rejected by lenders. With more stringent checks, more complex criteria and some small businesses considered higher risk than traditional employers, some business owners struggle to find a lender who will allow them to borrow the mortgage that they need. We know this can be frustrating so we’ll use our expertise to select a lender who understands self-employed income to make the process more straightforward. Want to discuss? Contact us.

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How Long do I Need to be Trading for Before Applying for a Mortgage?

If you’re a newer business and are wondering how long you need to have traded for before you can apply for a mortgage, the answer is – it depends. Whilst it varies between lenders, most will chiefly require you to have been trading for a minimum of two years. However, if you have just one year of self-employment, we do have solutions available. Additionally, there may be more solutions if you have a longer track record in the same field of work

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Can I get a Mortgage Despite Only Having One Years Accounts?

Commonly, ‘accounts’ refer to limited companies, but if you have a single year of self-assessment we may be able to help.  Fortunately, some lenders do accept one years figures but they may ask to see other documents or have other criteria. Usually, the fees and interest rate will reflect the length of employment available. We can advise you further when you contact us but if you have any questions please call us on 0333 090 2025.

If you’re an owner of a limited company, see our guide for limited company directors here: Limited Company Director Mortgage

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How do I Prove my Income in Order to get a Mortgage?

All lenders will expect to see proof of your declared earnings. If you are a sole trader, lenders ask for SA302s showing your profits from self-employment and any other earnings. If you don’t have SA302s but use self-assessment, you can download your tax calculations and matching year’s tax year overview to prove your income. In any event it’s likely these documents will be required. You can download your tax calculation and tax year overview through HMRC’s website.

When you work with us, we will happily deal with your accountant directly to get the necessary documents. However, we also offer a useful guide to show you how to obtain your own HMRC tax documents. You can access our guide here.

Lenders typically ask for two to three years figures depending on their lending rules. Additionally, they are likely to ask for business bank statements showing your takings, and personal bank statements to show what you are drawing.

My Business Earnings Aren’t Steady / Have Been Impacted by Covid - is it Possible to get a Mortgage?

It’s certainly been a difficult couple of years for business owners with many heavily impacted by the effects of Covid, Brexit and rising costs. If your earnings have been affected you might be wondering whether this will impact your mortgage application. It depends on the lender, some take your latest year’s earnings and some take an average which could reduce the amount of borrowing available. We take this into consideration when we place your application and can discuss this further with you when you apply.

My Income is Low, can I get a Mortgage?

The amount you can borrow varies from lender to lender based on their lending criteria and the calculations they use. If your income is low this will affect the maximum that you can borrow so you might not be able to borrow the amount that you need. As a broad rule, you can borrow up to 4.5 times your profit after expenses. Want to know exactly how much you can borrow? Contact us and find out.

Can I get a Mortgage Using Both my Employed and Self-Employed Income?

Income sources are changing with many borrowers now having multiple streams of income.  If you have earnings from a main employed role but also have a small business (or side hustle), you may be able to use both sources of income. It all depends on the lender and how long you have been trading for. You’ll need to supply evidence of both earnings via payslips and tax assessments and the lender may request more information around your working arrangements to ensure that you can sustain both jobs. We will discuss this with you further during an initial free meeting.

Can I Get a Self-Employed Mortgage With Bad Credit?

Worried about your poor credit history? It can certainly make things harder, even if your credit history has improved prior to wanting to make that application. We work with applicants who have missed payment, defaults and CCJs (County Court judgements), and for the most part, there is a solution available. To find out the chances of getting a mortgage please give us a call to discuss on 0333 090 2025. We may ask for a copy of your credit file (which you can obtain from credit agencies such as Check My File) so that we can get a full picture of your circumstances and advise you appropriately.

I’m Self-Employed and Want to use a Government Housing Scheme, can I get a Mortgage?

It depends on the exact scheme and we’ll need to check the eligibility criteria for you, but if you are applying for the help to buy, shared ownership or right to buy schemes then you could be eligible. For more details on the home ownership schemes available check out the Government Website.

How Much Deposit do I Need?

From time to time, lenders may allow you to borrow with as little as a 5% deposit, but if you can put down at least 10% you can apply for a 90% LTV (loan to value) product which will give you more options on the market when trying to get a mortgage. 

However, more and more flexible lenders are entering the market who provide equity loans and rent to buy schemes. A low deposit may not always be a barrier to home ownership.

Are Rates on a Self-Employed Mortgage More Expensive?

There aren’t specific rates for a self-employed mortgage so you can access the same rates as those who are employed, providing you can evidence your income and meet the affordability criteria. 

How Much can I Borrow?

Contact us today for a full assessment of your current situation and we will confirm how much you can afford, what you will be able to borrow and what level of deposit you will need. When you apply we will also be able to confirm what documents you will need to provide to prove your self-employed income – usually tax calculations and overviews, bank statements and proof of identity. Want to apply? Get Started!


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