Getting a self employed mortgage
When you work for yourself, it’s quite common for your income to be erratic. Whilst cash flow might be something that you learn to live with, it can be a problem when you come to buy a house, especially in the first few years of starting. Mainstream lenders typically offer mortgages on concrete figures, like a PAYE salary and if you’re self employed, at least 3 solid years of accounts.
If you don’t have that yet and aren’t employed by anyone but yourself, rightly or wrongly, high street mortgage companies will generally not be able to offer you anything. This is especially the case since the crash of 2009, where lenders are duty bound to avoid lending to people who can’t afford it.
What does self employed mean?
You’re going to be classed as self employed if:
- You are a major shareholder in a business (25% or more)
- You work as a sole trader
- You work as a partner of a business
Just How difficult is it to get a self employed mortgage?
Like we said earlier, if you’ve become self employed in the last 12-18 months, the traditional route of applying to a mainstream lender could prove tricky, as they work to a set of immutable criteria. The best route for someone in this position is to talk to one of the growing number of specialist mortgage brokers whose USP is that they have access to deals that you won’t find on the high street.
The deals we speak of are most certainly competitive in the marketplace, but the overriding benefit of these mortgages is that they have a broad criteria of acceptance and are suited to recently self employed people who can prove their income.
Can you not still do a self certify mortgage?
Unfortunately not. Since 2011, the Financial Conduct Authority have outlawed self cert mortgages, where the self employed were not required to prove their income.
In order to give yourself the best possible chance of success, you’re going to need to have the following as a minimum:
- Tax Calculation (most recent year)
- Tax Overview (minimum 1 year)
- Current Tax year Salary/Dividend projection* (these may be requested to be supplied by your accountant if you have less than 3 years history)
- Projected Accounts for the current tax year* (these may be requested to be supplied by your accountant if you have less than 3 years history)
- Company Accounts* (minimum 1 year full accounts)
- 3 Months Wage Slips (if applicable)
- 3 Months Business Bank Statements
- 3 Months Personal Bank Statements
- Credit Reports from the 3 main agencies – More info
- Current Tax year projected accounts (these may be requested to be supplied by your accountant if you have less than 3 years history)
*Only applicable if your business operates as a limited company.
At Niche Mortgage Info, we work with a group of carefully selected niche mortgages brokers, who have access to lenders that are prepared to take your entire financial picture into account and not automatically dismiss your application simply because you don’t meet all of their rigid criteria.
These niche lenders are also able to take other factors like being a Company Shareholder or Company Director into account, giving them their full weight of importance to the affordability of your mortgage.
If you’re in this position and you’d like more information on the subject, why not talk to one of our recommended brokers today.