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Joint Mortgage - Getting a Mortgage with A Self Employed Partner

November 13, 2019
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You may have heard the myths that getting a mortgage when you are self employed is more difficult. Some might even say it’s impossible. If you or your partner is self employed and you are hoping to get on the property ladder, you’ll be pleased to learn that this isn’t entirely true.

The process of applying for a mortgage is different for the self employed. But if you or your partner meet the requirements and the loan is affordable, you should have no trouble securing your mortgage.

What is a joint mortgage?

A joint mortgage will have two people on the application and both individuals will be responsible for making the payments. If one party will pay more towards the property, you can decide during the home buying process how to share the equity.

When applying for a joint mortgage, lenders will carry out checks on both parties to ensure that the mortgage is affordable. The benefit of applying for a joint mortgage over a single mortgage is that it allows you to combine incomes. This will mean you are able to buy a more expensive property than if one of you were to apply on your own.

Who can apply for a joint mortgage?

You don’t have to apply for a joint mortgage with your spouse. Unmarried couples are able to apply for a joint mortgage. Some lenders will even allow groups of up to four people to buy a property together. If you and a group of friends wanted to purchase a property you will all live in together, a joint mortgage could be one option.

When making a mortgage decision, lenders will look at a number of factors, including:

  • The amount of deposit
  • Affordability
  • Credit history of both applicants
  • Property type
  • Employment status

Is a self employed mortgage different?

When applying for a mortgage, lenders will want to know about your income. If you have a permanent work contract, you will simply provide details of your contract and evidence of past payslips. The lender will then calculate affordability based on your annual salary.

If you are self employed, this process is a little more complicated. Lenders will need to see evidence of your self employed accounts for the past 2-3 years. They may also want to see retainer contracts or future work contracts.

As a self employed worker, your income may be sporadic. Lenders will want to see that you don’t have any gaps in your earnings history.

How much will we be able to borrow?

If you pass the initial affordability checks, you will then be able to start thinking about how much you can borrow. This will all depend on the lender you choose. Some will allow you to borrow up to 4x your annual salary and some will offer 5x your annual salary.

If you or your partner is self employed and one is earning enough to make the application on their own, it can often be easier to proceed in this way. This is particularly true if you or your partner have not been self employed for very long.

How much deposit will we need?

As with any mortgage application, the more deposit you can provide, the better the rates you will be offered. The minimum you should consider saving would be 5% of the property value. If you can increase this amount to 15-20% of the property value, you are more likely to be accepted and to be offered a good deal.

Applying for a joint mortgage when one person is self employed might be a little bit more complicated, but it’s certainly not impossible. You can find out more about applying for joint self employed mortgages with Niche Mortgage Info here.

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