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Self-Employed Mortgages: A Guide
What is a Self-Employed Mortgage?
How Will your Self-Employed Application be Assessed?
If you are self-employed you will either be a sole trader, partner in a company or a Limited Company. Depending on what category you fall into will determine how a lender might assess you.
It is worth thinking about how you want your company to be registered at the time of applying for a mortgage. Company changes can sometimes have an adverse affect on your application.
As a Limited Company you should be keeping your business accounts separate from your personal ones. As the Director of a company, you will be paying your own salary which lenders will look into. If you choose to retain profits in your business this could cause issues just as not all lenders will factor these profits into their calculation.
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How Much Can I Borrow?
The amount that you can borrow will vary between lenders. Different lenders will look at different things when deciding how much they are willing to offer you as a loan. Some lenders will set the amount that you can borrow based upon the past three years of income whereas another may only look at one previous year of trading.
It all depends on which lender you go for to how you will be assessed. It is important to make sure you look around for lenders or seek the advice of a mortgage broker to look around for you. There are so many different lenders out there and there will be one to suit your needs.
How Can I Improve my Chances of Getting a Mortgage?
It goes without saying that you need to make sure that you can afford it to begin with. You need to make sure you have budgeted accurately and factored in any expenses no matter how small. A mortgage is a big financial commitment and it shouldn’t be taken lightly.
You need to ensure that you have a good credit score. If you have bad credit you will find it more difficult to find a lender willing to offer you mortgage deals. You need to make sure that you stay out of your overdraft and avoid taking out payday loans.
Make sure that you get all of your paperwork together, all of your tax calculation, bank statements, incomings and outgoings, three years of accounts and do not forget your SA302 forms. Using an accountant is the easier option as they can do all of this for you. It will also look better to a lender to show that you are serious about handling your finances.
Save up for a bigger deposit to boost your chances of being accepted onto a mortgage. It is no surprise that if you present to a mortgage lender a bigger deposit, they are going to be more favourable to get their hands on that lump sum. The market is tough at the moment and the bigger the deposit you can offer the better your chances will be.
Seek expert help from the likes of a mortgage broker. We are here to help and offer our expert knowledge of the whole of the mortgage market.
How Can a Mortgage Broker Help?
At One MP we deal with self-employed clients all of the time. We know it can be a pain and stressful when it comes to finding a mortgage and actually being accepted onto one. There are lenders out there who will cater to your needs, if you know where to look.
We can help you with gathering your paperwork together and we have built relationships with lenders and even vouch for you in some cases. They have an expert knowledge of the whole of the market and keep up to date with any changes going on.
There is nothing worse than putting so much work into a search for a property and all the work into your business to be told no. Avoid the disappointment and get in touch with a mortgage broker from the very first step.
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Based in Leeds, One Mortgages & Protection Limited offers impartial and unbiased advice to customers UK wide, no customer is too far away to help.