If you are self-employed and looking to remortgage your property, there are a few criteria you will need to fulfil. To start with, let’s look at the definition of self-employed. You are self-employed if you run your own business. Even if you only work with one main client, if you send them invoices rather than getting a pay slip every month, then you are self-employed. You will also know if you are self-employed if you handle all of your own taxes and national insurance contributions.
If you are self-employed and looking to remortgage an existing property, you will need to speak to your mortgage advisor. Just like a self employed mortgage, your mortgage provider will need to see evidence of earnings going back at least two years. This means that if you are newly self employed, you may need to wait a while before applying or shop around for a different provider. In general, a mortgage provider will want to see proof of past income, proof of future income and a strong credit score.
Proof of income
Many mortgage providers will need to see the last few years of your accounts. This is usually in the form of a SA302 form. Some providers will also need to see accounts prepared by a chartered accountant. The more years of accounts you can provide, the better your application will look. If you applied for your mortgage when you were in full-time employment and then decided to switch to self-employment, you will need to wait at least one year to remortgage your property.
In addition to evidence of past income, you will also need to show evidence of future earnings. If you can show future contracts for work to be completed or regular retainer agreements with clients, this will help to strengthen your application. In the past, the self-employed could apply for something known as a self-cert mortgage, but these were banned as a result of abuse. Rather than proving their income, self employed individuals could simply state their income. This led to many people borrowing more than they could afford and this type of mortgage was outlawed following the credit crunch.