Mortgages for self employed with 1 years accounts

Self-employed individuals often have far greater control over their income. If they have a quiet month, they can market their skills or increase their prices. Full-time employees, on the other hand, would have to request a pay rise, and this could take months or even years to be accepted. Despite this increased control over their income, the self-employed often have a much tougher time trying to get a mortgage.

While a full-time employee only needs to be working for a company for 3-6 months to be considered, the self-employed need at least one years accounts in order to apply for a mortgage. All mortgage providers are different, and some will require up to 3 years of accounts before they can go ahead with a mortgage application.

Ultimately, this is to protect the lender and the borrower. Lenders want to make sure that the borrower is going to be able to continue making payments further down the line. As of December 2017, the following applicants would be eligible for a mortgage, subject to status.

Limited company directors trading for 12 months
Sole traders trading for 12 months
Established businesses recently limited
Contractors working for at least 12 months
Self-employed for 12 months with poor credit
A buy-to-let mortgage with no income
Up to 95% mortgage amount with help to buy scheme

It’s a common misconception that you need years and years of trading history in order to get a mortgage. If you’ve been refused a mortgage because you are self-employed, a sole trader or the director of a limited company, this might have more to do with the mortgage provider and nothing to do with your financial circumstances.

If you are serious about getting a mortgage, read on to find out about the ins and outs of mortgages for the self-employed, even if you only have one year of accounts.

Frequently asked questions about mortgages for the self-employed

To help answer many of your pressing questions, we’ve compiled this guide covering some of the most commonly asked questions about self-employed mortgages with 1 year’s accounts. Get in touch if you have any questions which aren’t answered on this page, or if you would like more information about how we can help.

How long do I need to be self-employed to get a mortgage?
Can I apply for a mortgage before I have 12 months of accounts?
How to get a mortgage with under 2 year’s of trading history
How much can I borrow?
Which occupations are acceptable for lenders?
Why am I having trouble getting a self-employed mortgage?
Which figures are most important for my mortgage application?
Can I get a mortgage when self-employed and with bad credit?

How long do I need to be self-employed to get a mortgage?

The majority of lenders, including most high-street lenders, will ask to see 3 year’s of accounts before you are eligible for a mortgage. However, there are mortgage providers that specialise in mortgages for the self-employed. These will consider 2 year’s of accounts when making a lending decision. They will often consider the average of the last 2 year’s of your income, if one is higher, or consider the most recent year if your income remains the same. A small number of mortgage providers will accept applications from the self-employed with just 12 months of accounts. You will need to work with a niche mortgage advisor in order to find out which lenders are most likely to accept your application.

Can I apply for a mortgage before I have 12 months of accounts?

If you haven’t filed your first tax return yet, then it is unlikely that you will find a mortgage provider that is willing to accept your application. This is because mortgage providers use the figures from your tax return to verify your income. You wouldn’t lie about how much money you have earned, because this would mean that you owe more tax and have broken the law. So, lenders use tax returns as a way to verify your income.

If you are nearing the end of your first year of trading, you could, in theory, apply for a mortgage in principle. This is a statement from a mortgage provider that outlines how much they would be willing to lend you. They are valid for 3 months and are used by many people to help them put in an offer on a property with confidence. Once an offer has been accepted, your application will then be processed.

Having a mortgage in principle can allow you to start your search for a new property before the end of your first full year of trading. By the time comes to do your actual mortgage application, it’s likely that you will have your full 12 months of accounts.

How to get a mortgage with under 2 year’s of trading history

Most mortgage providers will ask to see 2 years of accounts, but an increasing number of lenders are waking up to the idea that more and more people are heading down the self-employed route. Many lenders will now simply ask to see as much of your trading history as possible. If you were previously employed in a similar industry and drawing a regular wage, you could also use this in support of your application. If you have 20 months of trading, for example, the lender might also choose to make a project for the full 2 years based on the information provided.

How much can I borrow?

Once you have been accepted by a mortgage provider, you will be treated the same as any other applicant. This means that you will be able to borrow the same amount as any other employee. The actual amount that you can borrow will be based on your income. It will usually be around 4x to 5x your annual income. If you are on a higher income, it’s possible that you may be able to stretch this further, provided you can prove that you can afford it.

The more accounts you can provide, the better, but in general, lenders will be on the cautious side unless you can demonstrate why they should increase the amount. If you have incomplete accounts for your second or third year, you may be able to use projections to show why you should be able to borrow more.

For example, if you net profit for the tax year ending in 2017 was 22,000 and your net profit for the first 9 months of 2018 was 25,000, then an accountant might be able to demonstrate why your earnings are likely to be higher. At an average rate of £2,770 per month for 2018, the full 12 months could be as high as £33,300 for the whole year.

A lender offering 5x annual income would offer a £166,000 mortgage on the projected amount or just a £110,000 for the first year of trading. This is a huge difference, so it’s worth investigating if your mortgage provider will consider projected income estimates. Income isn’t the only thing that your mortgage provider will consider.

Which occupations are acceptable for lenders?

Lenders aren’t so too concerned with your occupation, provided the work is legal and that you create a tax return every year. Lenders are very flexible about who they lend to and are more concerned with determining affordability. It’s common for taxi drivers, plumbers, electricians and tradespeople, musicians, landlords, retailers, those running online businesses, professionals and investors to all be able to secure a mortgage. If you’re not sure if your occupation will be accepted, it’s best to speak to a mortgage provider to get clear answers before proceeding. In general, however, your actual occupation won’t be contested by a mortgage provider.

Why am I having trouble getting a self-employed mortgage?

Prior to 2011, the self-employed could take advantage of self-cert mortgages. These allowed the self-employed to tell lenders how much they earn without providing any evidence. This type of mortgage helped many self-employed people to get on the property ladder. Unfortunately, they soon became known as the liar’s mortgage, as so many people inflated their income to be able to borrow more money. These mortgages were ultimately not affordable and many people lost their homes as a result.

In 2011, this type of mortgage was banned during the Mortgage Market Review. As a result, it’s now a lot more difficult for the self-employed to get mortgages as lenders now have to take more steps to ensure they are lending responsibly. While it is harder to secure a mortgage when self-employed, it isn’t impossible. If you are rejected by one lender this doesn’t mean that you cannot get a mortgage.

Which figures are most important for my mortgage application?

The majority of lenders will want to see your net profit for the past 12 months to three years. Many people forget that turnover is not the same thing as net profit. This is why most lenders will ask to see your SA302 statement in order to calculate how much you can borrow. The SA302 statement is your end of year tax statement which shows your income and tax liability for the year.

Some providers will also ask to see detailed accounts showing where your money is coming from and how often you get paid. These will often need to be drawn up by a qualified and chartered accountant using professional accounting software. Even if your accounts are handled by an accountant, it’s important that you have a solid understanding of your finances. This can be helpful in explaining things like seasonal fluctuations or spikes in your income.

If you are hoping to use projected income figures as part of your application, then it’s important that you can explain why your income is likely to increase or remain steady in the next few months and years. If you have recently secured a large contract, for example, this would be helpful in securing a higher mortgage amount.

Can I get a mortgage when self-employed and with bad credit?

Many people assume that it’s the end of the road if you have poor credit, but this couldn't be further from the truth. Even with a CCJ, some mortgage providers will still consider your application and the occasional late payment isn’t enough to make you ineligible for a mortgage.

As a general rule, applicants with poor credit will need a higher deposit, usually around 15% of the property value. CCJs and defaults more than 2 years old will also be ignored, even if the CCJ isn’t settled. Even missed or late payments on your credit accounts in the last 12 months won’t rule you out for a mortgage. Many lenders also disregard any issues with mobile phone companies.

If you are concerned about your credit report getting in the way of securing a mortgage, the best thing you can do is ensure you have a complete picture. There are three different credit agencies in the UK and you can access your records for free by signing up for free trials with Experian, UK Credit Ratings and Check My File.

Once you have a complete view of your credit profile, you can correct any mistakes, close dormant accounts and ensure everything is up-to-date. If you aren’t sure if your credit report is going to be an obstacle to getting a mortgage, then speak to a mortgage advisor who will be able to read between the lines of your report and identify the aspects which lenders look out for.

How can I improve my credit report in the eyes of lenders?

The way lenders interpret your credit score is not an exact science and they don’t generally publicise their approach. Your credit report is one part of a wider picture and it is used to get an idea of your past financial behaviour in order to determine if you are a low-risk borrower. Mortgage providers want to see that you make payments on time, so the worst thing you can do is stop using your credit facilities. They can’t see that you have a track record of making credit payments on time if you never use your credit card.

It’s also important to check your credit file regularly so that you can spot problems as they arise. It’s not uncommon for people to move house, fail to close their phone account properly and then end up with an open account that they have no idea about. This can quickly turn into a CCJ if the phone provider can’t reach you. By checking your credit report quickly, you can respond to issues like this in a timely manner before they become problematic for your credit application.

Can I get a help-to-buy mortgage when newly self-employed?

The number of lenders offering the attractive help-to-buy mortgage scheme to the self-employed is low, but they are out there. The help-to-buy scheme allows people to apply for a 95% mortgage with just a 5% deposit. It is intended to help people get on the property ladder who might otherwise struggle to save up a large deposit.

There are restrictions on the help-to-buy scheme and lenders will make much stricter checks. For the self-employed, this means that you will need to jump through yet more hoops in order to prove your eligibility. For example, if you have a CCJ of over £500 registered in the past 3 years, you won’t be eligible for a help-to-buy mortgage. You also can’t use the help-to-buy scheme for a home you intend to rent out (buy-to-let) or for a holiday home.

Can I remortgage my property with just one year’s accounts?

Remortgaging is often a similar process to securing to main purchase mortgage. You will need to prove that the repayments will be affordable and you will need to provide at least one year’s accounts in support of this. If you are thinking about remortgaging, it’s often best to return to the bank that supplied your first mortgage. They have a pre-existing financial relationship with you and may look more favourably on your application than a new mortgage provider would.

How do I increase my chances of getting a mortgage while self-employed?

Lenders will always look at the bigger picture, which includes factors such as your past financial behaviour, your current circumstances and commitments and the general affordability of your loan.

The simplest way to increase your chances of getting a mortgage is to secure a large deposit, usually around 15%. This helps to bring down the amount that you are borrowing. The next step is to clear up your credit report and ensure your accounts are all up to date. And finally, you should get your accounts in order so that you can prove your income. If you have been trying to keep your income down through legal methods in order to limit your tax liability, it’s important that you stop this or you could end up being able to borrow much less.

Can I Sell My House with Mortgage Arrears?

If you are struggling to keep up with your mortgage payments, you might be wondering if selling the property is an option. Many people ask us: can I sell my house with mortgage arrears? This will depend on a number of factors and will nearly always be linked to your personal circumstances. While one person might be able to sell a house with mortgage arrears and walk away, another person might end up owing more money than is made from the sale. Read on to discover the steps you need to take if you want to sell a house with mortgage arrears.

First things first: speak to your lender

The first step you should take when you’re struggling to make your mortgage payments is to get in touch with your lender. If you are expecting your financial situation to improve in the future, they may be able to come to an arrangement to help you through this difficult stretch. But you will never know until you get in touch with your lender.

Your mortgage would typically be your largest expenses every month, so if you are struggling to make your mortgage payments, you may be struggling with other debts. If there is no obvious way to increase your income to cover the shortfall, selling your home might be the only option. This could give you a lump sum that would enable you to pay off your debts and move on.

Get a valuation

If you decide to sell, you will need to get a valuation on the property. This will help you to determine if the sale of the property would be enough to pay back any outstanding amount on your mortgage and your mortgage arrears. If the property has increased in value since your first bought it, you could walk away with a lump sum that might allow you to get your life back on track. But it doesn’t always work this way, particularly in a harsh economic climate. If the value of the property has fallen below what you owe the lender, this is called negative equity.

What if there is negative equity?

Negative equity occurs when a property loses value. This might happen due to a downturn in the housing market. If the value dips below what you still owe on the mortgage, this is called negative equity. If you sell a home with mortgage arrears with negative equity, you will still owe your lender money after the sale. This is called a shortfall and it could leave you worse off. You would need the lender’s permission to sell the property if there will be a shortfall.

In this situation, a homeowner may be tempted to give back the keys to the property and relinquish ownership to the bank. This is known as voluntary repossession. In this situation, a lender would ask you to sign an agreement saying that you will still pay any shortfall after the sale of the property. So if the home is sold for less than the value of your mortgage, you will still owe for the outstanding amount, in addition to any mortgage arrears.

Could you “trade down”?

If you aren’t dealing with negative equity, you could choose to trade down to a smaller property. This is a popular choice for those in mortgage arrears who are not expecting their finances to improve. Finding a less expensive property to purchase and then selling your current property would allow you to reduce your monthly mortgage payments. You will also be able to pay off any arrears and you may even be left with a lump sum to help pay off any other debts you may have accrued.

How much can I borrow post bankruptcy

How much can I borrow after Bankruptcy?

Since 2009 and the financial crisis, mortgage companies have had to make their lending criteria more robust amidst the accusations from some quarters that irresponsible lending was partly to blame for the crash. The regular income that you can prove is what your scope for borrowing will be based on, typically on the basis of it being 5 times your self employed or PAYE income.

What About After Bankruptcy?

The same basic rules still apply after your bankruptcy has fallen off of your credit file (usually in 6 years), but the chances are that if you’ve only recently begun enjoying a clear credit file, your score will be pretty low. This puts your application into the slightly complicated category, but it shouldn’t affect how much you can borrow too much, though you could be looking at a figure closer to 4x your gross income.

Another factor that can boost your gross income figure is if your partner, husband or wife also works, as their income can be included in a joint application. Mainstream lenders might not give full weight to the 2nd income, but it will certainly increase your base figure.

And If This Isn’t Enough?

Unfortunately, if you’re applying via the traditional route and your combined incomes don’t total the amount you need, there won’t be much more you can do. However, you shouldn’t despair, as there are other routes you can take that will involve the use of more forgiving, less immutable lending criteria.

At Niche Mortgage Info, the mortgage brokers we work with have access to mortgage deals that take your whole financial picture to be considered rather than just your basic gross employed income. Should you be a company shareholder or a company director, any income derived from these sources will also be included in the calculations.

Raising Your Credit Score

If you’ve been discharged from bankruptcy within the last 6 years (or even before that), there’s a more than average chance that you will have a less than perfect credit score. If so, there are steps you can take to help speed the process up. In principle, the longer it’s been since your bankruptcy was registered, the less trouble you’re going to have getting a good deal on your mortgage.

For more information on boosting your credit score, take a look at our post-bankruptcy credit file clean up page and to see how much you could borrow speak to a broker.

Mortgages for Discharged Bankrupts

If you’ve been declared bankrupt in the past, this doesn’t have to mean the end of your dreams of owning a home. Many people assume that bankruptcy means that you’ll never be approved for a mortgage, and while it might be more difficult, it isn’t impossible. We regularly hear from customers who have been declined from their first mortgage application and are quick to assume that the search ends there. However, we’re pleased to say that it isn’t an uncommon situation to be in and there are ways to find a mortgage after bankruptcy.

This type of mortgage might be trickier to set up and you might have to jump through more hoops than the average mortgage applicant. However, it can be done. Once you have satisfied a lender that you aren’t high risk, you will be treated like any other lender. And once you have a mortgage, this can help you to secure other types of credit and start building up your credit report even further. So, if you’re dreaming of owning your own home or want to invest in a buy-to-let property following bankruptcy, don’t give up yet.

What is bankruptcy?

If you are struggling to pay back your debts you can apply for bankruptcy. If you owe over £5,000, your creditors can also apply to make you bankrupt, even if you don’t want them to. Bankruptcy is a legal status that allows you to make a fresh start after 6 years. However, it isn’t something that should be taken lightly. If you declare yourself bankrupt, you may have to continue paying your debts for up to 3 years. You can also have your property seized in order to pay back your debts. If you have been made bankrupt, some occupations won’t allow you to work again, and in many cases, it can be more difficult to secure credit.

As with any type of poor credit, bankruptcy can make you feel like you are on a blacklist of borrowers. The good news is that more and more lenders are committing to help those with poor credit get back on their feet, even those who have been declared bankrupt. If you’re trying to get a mortgage following bankruptcy, this article should help to clear up some of the common misconceptions surrounding mortgages for discharged bankrupts, including:

Mortgages for discharged bankrupts from 1-6 years ago
Securing a mortgage with a history of repossession
Securing a mortgage with bankruptcy and a small deposit of 10-15%
Securing a mortgage with a 5% deposit
Mortgages for discharged bankrupts with a large deposit
But to let mortgage for discharged bankrupts
Remortgaging following a discharged bankruptcy
Bankruptcy annulment and mortgages

How long do I need to wait after bankruptcy before I can get a mortgage in the UK?

Many people assume that they won’t be eligible for a mortgage after being declared bankrupt, but this is rarely true. While you will have to wait until you are discharged before applying, this can be as little as 12 months and even less depending on the court’s ruling. Once you have been discharged, you will then have to focus on rebuilding your credit and ensuring that you look trustworthy in the eyes of lenders again. During this time, you might assume that not taking on any more credit is a wise mood, but this might actually be counterproductive. In reality, you need to show lenders that you are capable of making payments regularly and on time.

In terms of a mortgage application, the amount of time you wait between your discharged bankruptcy and applying will have a huge impact on your eligibility and the amount of deposit required to move forward.

The longer you wait, the lower the deposit you will need and the fewer restrictions that will apply to your application. If you have a good financial contact for 4-5 years following bankruptcy, you might find that you are able to borrow 90-95% of the value of a property just like any other borrower. Even those who have only been discharged for 12 months may find they are eligible for a mortgage with a 25% deposit.

The table below shows typical eligibility for discharged bankrupts seeking a mortgage. As you can see, the longer you leave it before applying, the more likely you are to be able to secure a mortgage with a smaller deposit.

Can I get a mortgage if…?	Declared bankrupt	Bankruptcy discharged	Eligibility	Deposit required
I’m just bankrupt	0 years ago	0	No	N/A
Bankrupt 1 year ago	1 year	0	Low	At least 40%
Bankrupt 2 years ago	2 years ago	1	Low	At least 25%
Bankrupt 3 years ago	3 years ago	2	Low	At least 25%
Bankrupt 4 years ago	4 years ago	3	Med	At least 15%
Bankrupt 5 years ago	5 years ago	4	High	At least 10%
Bankrupt 6 years ago	6 years ago	5	High	At least 5%
Bankrupt more than 6 years ago	6+ years ago	6+	High	At least 5%

Please note that this information can change regularly so you should always consult with a mortgage advisor before making any financial decisions related to mortgages. During times of political uncertainty, lenders might be less willing to lend and those who are considered high risk are often the first to be rejected.

The table above doesn’t guarantee that you will be given a mortgage if you were made bankrupt 6 years ago and have a 5% deposit. Many other factors go into the decision-making process and the time that has elapsed since your bankruptcy is only one of them. If you have a poor credit file, for example, and have done little to rebuild your credit, you might find it more difficult to get a mortgage. However, if you have been responsibly working towards building your credit, you may find you can get a mortgage much sooner.

Here is an infographic we put together to break all stages down in a visual way.

How do I give myself the best chance of having my mortgage approved after bankruptcy?

Bankruptcy doesn’t have to mean the end of the road for your chances of owning your own home or even purchasing a buy-to-let property. If you’re serious about getting your finances back on track, there are steps you can take to start building your credit again. Once your bankruptcy is discharged, you will find it more difficult to get credit, so you should essentially start from the beginning. Follow these steps to building your credit following bankruptcy…

1. Check ALL credit reports and make corrections

There are three main credit reference agencies in the UK and they all have a different system for generating your credit score. Before you can decide if you’re ready to take out a mortgage, it’s important to get a complete picture of how each of these credit checking agencies views your profile.

It’s impossible to know which credit checking agency your mortgage provider is using, and some will use an amalgamation of all three in order to generate a more complete picture. If you don’t have access to the same information, it’s difficult for you to know when you are ready to make your application.

It’s also very common for mistakes to appear on your file following bankruptcy. You might also see some closed accounts still showing late balances, or defaults still cropping up on your file. If you see a mistake on your credit report, you can query this with the company and request that it be updated. It’s not uncommon for individuals to be declined credit because of mistakes on their credit report, but they will assume that it is because of their bankruptcy.

2. Check if you are eligible for a mortgage

Once your credit report is up-to-date, you can then inquire with a mortgage expert to find out if they believe you would be eligible to apply. They are used to working with people from all different financial backgrounds, so don’t assume that they won’t work with you because of your bankruptcy.

3. Rebuild your score until you are eligible

If your advisor recommends that you wait a while before applying for your mortgage, use this time to rebuild your credit score further. A simple way to do this is by making sure you meet your monthly payments on a credit card or overdraft. If you are struggling to get credit because of your history with bankruptcy, you can apply for a credit card specifically for people with poor credit. Use this for small transactions throughout the month and pay it off in full at the end of the month.

What if I have credit issues before or after bankruptcy?

Any credit issues from before your bankruptcy should be wiped out and not pose any further problems. So, if you had late payments, mortgage arrears or CCJs, this should be removed from your credit report once you have been discharged. This usually takes place one year after you have declared bankruptcy.

However, if your credit issues continue after your bankruptcy, this is likely to be seen an unfavourable to lenders. Mortgage providers will already see you as a high-risk customer, and if you have failed to bring your financial situation into line by continuing to make late payments then this might lead to your application being declined.

This is another reason that it is important to keep an eye on your own credit report. Mistakes left on your report could appear to lenders as new credit issues when in reality they should have been expunged from your record following the bankruptcy.

Time heals most things on a credit report, so if you faced issues immediately after your discharge but have improved your credit over a period of 6+ years, these are unlikely to have an impact on your record.

Where can I get a mortgage after bankruptcy?

There are currently around 20 mortgage providers who will accept applications from discharged bankrupts. They all have their own rules and regulations for who can apply and how long they need to wait after being discharged before applying. As outlined above, there are no guarantees when it comes to applying for a mortgage following bankruptcy.

Mortgage providers will consider many different factors when making a lending decision. The best way to find the right mortgage provider for you is to speak to an experienced mortgage advisor with knowledge of mortgage for discharged bankrupts.

Can I get a buy-to-let mortgage after bankruptcy?

Buy-to-let mortgages are some of the hardest to come by, but it is possible to secure a buy-to-let mortgage following bankruptcy. You will need to meet much stricter criteria, usually the following:

Be discharged for at least 3 years.
Have a clean credit score since your discharge
Secure at least a 15% deposit, sometimes even more
Own at least one other property
Have some personal income. There is no minimum income threshold, but you will need to have some income either from employment, self-employment or retirement

Can I use the equity in my home to remove bankruptcy debt?

This is a seldom used route but highly effective in removing bankruptcy from your file. If you are able to pay off the bankruptcy debt within a timeframe set out by the courts, you could secure something known as an annulment. This effectively wipes your credit score clean without resorting to bankruptcy and the discharge period.

Your eligibility for an annulment will depend on how you accrued your debts. For example, if you were forced into bankruptcy by HMRC for failing to pay a tax bill, you could use a secured loan against your home to clear any debts and halt the bankruptcy. This would leave your credit report unscathed and allow you to remortgage your home further down the line.

If you are forced into bankruptcy because of multiple debts, securing a loan to clear off your debts is going to be difficult. However, with a specialist second charge mortgage, you could avoid the bankruptcy process.

Conclusions

As outlined above, there are many options for those dealing with a bankruptcy who want to get on the property ladder. You could use a secured loan against your home to halt the bankruptcy proceedings. Or you can bide your time following bankruptcy and spend the time building your credit report.

Bankruptcy doesn’t have to mean that you can never get a mortgage again. Instead, it simply means that you will need to be wise to the companies that work with discharged bankrupts. A declined application doesn’t have to mean that you cannot get a mortgage, you might simply need to work on building your credit and allow more time to pass.

If you’re not sure how to proceed with your mortgage application, speak to a specialist mortgage advisor. They will be able to look at your situation and decide if you are ready to make an application or tell you what steps you need to make to get your credit report in line. Approaching the right mortgage provider to secure your agreement in principle can give you the confidence to start your search for the right property.

It might be more difficult to secure a mortgage for discharged bankrupts, but it isn’t impossible, so don’t give up!

I’m Self Employed AND I’ve Previously Been Bankrupt. I Can’t Get a Mortgage...Can I?

Ordinarily speaking, in a scenario where someone has previously had bad credit, such as discharged bankrupts or they hold self-employed status, the chances of getting a mortgage approved are very slim indeed. However, the notion of being a homeowner shouldn’t be dismissed out of hand, as there are options available, even when it seems that the cards are stacked against you.

Working For Yourself

There are in excess of 5 million people working on a self employed basis in the UK, which is a sizeable chunk of the nation’s workforce. It stands to reason then that the major lenders have to cater for this group, which they do, although things are made a little more difficult during the application process. Proof of income is the key in this regard, which is obviously much easier to provide than if you’re a PAYE employee.

Essentially, being self employed shouldn’t stop your ambitions of owning your own home. As long as you have 2-3 years of accounts to prove affordability and between 10-20% deposit to put down, there shouldn’t really be an issue.

What if I’ve Been Bankrupt as well?

This is the factor that most people think is the killer blow to getting a mortgage, but having been bankrupt in the past really doesn’t mean that you can’t get a mortgage. It’s really a question of how long ago your bankruptcy was, whether it’s still showing on your credit file and who you apply for your mortgage with. The fact that you’re also self employed is something of an aside in this regard.

How long ago it was is important, as for most mortgage companies, your bankruptcy will have to be no longer on your credit file, which typically takes a least 6 years to happen, from the date it was first registered

Who you apply to can also be critical, as specialist lenders offer a much greater chance of approval, as they work to a different set of criteria that is based around affordability, not status. Of course, you’ll have to work to improve your overall credit rating once you’ve been discharged from bankruptcy, but with these guys, you won’t be discriminated against for past problems.

**Everyone deserves a second chance, right?**

With more people being declared either bankrupt or insolvent in the UK than ever before, it’s a problem that a record number are having to face. The good news is that you can recover from it and enjoy the kind of financial freedom that allows you to consider buying your own home. It will take a bit of work on your part, but if you can afford the repayments and can prove it, the specialist mortgage brokers we work at Niche Mortgage Info have the access to special deals that you need to make it happen.

So don’t give up on the idea of your dream home until you’ve had a look around our website www.nichemortgageinfo.co.uk. There you’ll find lots of information on improving your credit rating and about the mortgage options available to those with adverse credit.

The Importance of Checking Your Creditor Default Dates

Once you’ve settled your IVA, been discharged from bankruptcy or simply completed your debt management plan….you’ve made it, so congratulations are in order! The hard work of paying back the money you owe is over and you can look forward to a more prosperous and financially stable future.

However, before you get too carried away, there are still some things you need to do in order to help your credit status recovers as quickly as it should. One of those things is checking that your credit file reflects your new debt free status, as it doesn’t always get communicated to all three of the UK’s credit reference agencies Experian, Equifax and Noddle (Call Credit).

What will tend to happen is that when you settle your debt with a creditor, that creditor will inform just one of them and not the other two. Creditors aren’t obliged to inform all three, so it’s down to you, the debtor, to ensure this new state of affairs has been communicated to all of them.

Credit Controller

With any company that you might owe money to, delinquent accounts are the responsibility of the credit controller, so this is the person that you need to report incorrect information to about you or specific default dates. Should your defaults be showing as later than the start of your IVA or bankruptcy, then this needs to be rectified as soon as possible. Typically, your IVA or bankruptcy will be on your credit file 6 years from the date it started. Applying for a mortgage or other types of credit is going to be curtailed if your file is still incorrectly showing as having active defaults after the agreed date.

Write, Don’t Phone

When you do contact the offending creditor, it’s recommended that you do it in writing and you address it to the aforementioned credit controller. If you phone it in, they’ll likely just ask you to write in and if you call the credit reference agency, they’ll tell you to do the same. Save yourself time and stress by writing first. Using an IVA as an example the letter can be wording like the bellow;

re: [account/reference xxxxxxxxxxxxxxx]

I started an Individual Voluntary Arrangement (IVA) on dd/mm/yyyy. You can confirm this by checking the Insolvency Register at https://www.insolvencydirect.bis.gov.uk/eiir/.

I am writing to ask you to correct my credit file for [details of your debt with the creditor, including the account number or reference number]. This debt is included in my IVA.

At the moment [there is no default date shown / the default date is shown as dd/mm/yyyy]. This is incorrect and a breach of the Information Commissioner’s Office guidelines and the Data Protection Act 1998. There should be a default date not later than the start date of my IVA.

Please correct this entry within 28 days or supply me with a written reason why you will not do so.

We’d also recommend that you keep a copy of this letter for your own records, just in case it gets lost in the post! It doesn’t cost that much more to get the letter signed for on delivery, so if you want to make sure your creditor definitely gets it, recorded delivery might be an idea.

In Conclusion

Verifying that the credit reference agencies all have the right information on you is an important job which often gets overlooked. If more people knew the impact of not doing it, then it probably wouldn’t get forgotten as much as it does. At Niche Mortgage Info, we are dedicated to ensuring that people get the information and assistance they need to get on with their lives after financial issues.

For more information on this and all matters relating to getting a mortgage after all types of bad credit, take a look through our website www.nichemortgageinfo.co.uk.

Thanks so much for reading our blog and we’ll see you next time.