Just a few of the comments made by some of the over 40% of UK individuals whose application for a mortgage gets declined. But is the inability to secure the funds to purchase a property down to these individuals, or is it down to the out-dated and inaccurate advice they’ve been given?
The mortgage research that revealed the fact that those people who were refused mortgages feel ashamed, also concluded that many Brits don’t even bother looking into getting on the property ladder because they believe they’ll be refused. 35% believe they’ll be refused a mortgage because they don’t earn enough 33% find the whole mortgage process too much hassle
However, many of the people who are self-ruling themselves out of getting mortgages are basing their decision on outdated facts and information. Among those not bothering to look into getting a mortgage are many of the close to 5 million self-employed individuals in the UK.
A great swathe of these entrepreneurs mistakenly believe that there’s little point them even thinking about a mortgage, let alone approaching a lender. Their irregular income. Their inability to produce at least 3 years’ worth of accounts. Just a couple of reasons that are leading the self-employed to steer clear of getting a mortgage.
But do they have good reason for taking such a cynical view of mortgages? Research would seem to say ‘yes’, revealingalmost half of mortgage applications are being rejected for reasons including self-employment.
Yet this negativity is not borne out by our research here at Niche Mortgage Info, which reveals that the vast majority of mortgage applications made by the self-employed are being accepted.
If you can only provide 1 years’ worth of accounts, some lenders will walk away, as their criteria requires you to supply 2 or 3 years’ worth of accounts. But this is not a reason to stop applying for a mortgage, as there are lenders out there who can accept just 1 year’s worth.
Changes in your income level can cause problems. To calculate what you can afford to pay, lenders are likely to calculate your average income over the past 2 or 3 years.
You’ll no doubt have plenty of questions to ask about getting a mortgage as a self-employed person. We’ll try and answer as many of them as we can below, but please be aware that all details provided below is only supplied for informational purposes. Should you require more assistance, please reach out to the niche mortgage info team here.
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 numbers 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.
Unfortunately not. Since 2011, the financial conduct authority has 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: