Self Employed – Helping Sole Traders, Partnerships & Company Directors obtain a Mortgage
When you’re self-employed, applying for a mortgage by yourself can be tricky. The Mortgage Centre know exactly how to obtain a mortgage when you run your own business. Contact Us today to discuss your circumstances & options available in more detail.
Can I get a Mortgage if I’m Self-Employed?
Yes. There isn’t a specific mortgage for the self-employed, the difference is how lenders assess & how you prove your income.
As self-employed income can be variable & less reliable, lenders generally want to see a longer track record (generally 2 years’) of your income to assess how sustainable it is. The Mortgage Centre do however have access to certain lenders that will potentially lend based on your latest accounting period.
What proof of earnings do I need to provide for a mortgage when self-employed?
Make sure to discuss & plan well in advance with The Mortgage Centre & your accountant to prepare the documentation needed.
The information & documentation required will depend on your self-employed status.
Sole Traders
Lenders will base the amount they’re willing to lend on your Nett Profits (Total Income Received minus Expenses) – They will verify this from your Tax Computations (previously known as an SA302) & their corresponding Tax Year Overviews to confirm that you have paid your tax declared.
Partnerships
Treated the same as Sole Trader businesses. Lenders will want to know your share of profits.
Limited Company Directors
The way lenders assess your mortgage borrowing power will depend on the percentage of business owned. If you own less than 25% of the business, lenders will generally assess you as employed.
If you own more than 25% of shares in the business, then to a mortgage company you are self-employed. The majority of lenders will calculate your mortgage affordability based on the salary & dividends you have drawn from the business. However, if you prefer to keep money in your business then The Mortgage Centre does have access to some lenders that will instead base their calculations on your Salary & share of Retained Profits.
How long do I need to be self-employed to get a mortgage?
Lenders will generally want you to have 2 full years’ worth of accounts. The Mortgage Centre do have access to a couple of lenders that will potentially lend after 1 year, however.
How much can I borrow when self-employed?
Mortgage lenders will typically base how much they will lend you on an average of your latest 2 years’ income multiplied by 4.5.
The Mortgage Centre specialise in securing mortgages for the self-employed do have access to lenders that will potentially lend more than this if you meet their criteria, however. This will depend on the stability of your income, income declared & Loan to Value.
