Self-employed mortgages
If you're self-employed and are considering getting a mortgage, our experienced brokers can help find the lender and deal that suits your circumstances.
Why use Your Mortgage Room?
At Your Mortgage Room, our tailored approach has helped a wide variety of self-employed business people get a mortgage that suits their circumstances.
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Whether you're a sole trader, a freelancer or the director of a limited company, our team can support you at every stage of getting a self-employed mortgage.
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We have a deep understanding of the sometimes unique challenges the self-employed face; we bring years of expertise in finding great mortgage deals to the table, and have an unwavering commitment to supporting you on your homeownership journey.
Getting a self-employed mortgage
It's important to understand that a self-employed mortgage is the same as any other mortgage product. Getting a mortgage should be no harder for someone who is self-employed than a salaried worker.
The range of mortgage products is the same, as is the application process. A healthy deposit and good credit rating are both good to have, and everyone is asked to provide evidence of a stable income to ensure they can make the repayments on their mortgage.
What is different is that some lenders can be more flexible to the needs of self-employed borrowers, and, as part of their mortgage requirements, ask them to provide proof of income not required of salaried staff, such as upcoming contracts.
As mortgage brokers with lots of experience identifying and arranging mortgages for self-employed people, we know straight away which lenders are more likely to be favourable to self-employed applicants.
Whether you're a sole trader, contractor or limited company director, we can help.
There are several types of workers that a mortgage lender considers to be self-employed.
They include sole traders, contract workers and freelancers, as well as anyone whose primary income comes from a business they own at least 20% of.
In addition, limited company directors, even if they are employed by their own firm and considered as such by HMRC, are also regarded as having a self-employed income for mortgage application purposes.
If you run your own business and want to help to get a mortgage you can afford and that gives you the most suitable deal,
talk to us.
Just like everyone else looking to get a mortgage deal, self-employed people can choose from a wide variety of mortgage products, including:
First-time buyer mortgages
Tracker mortgages
Joint mortgages
Interest-only mortgages
Whether you're looking for long or short term mortgage deals, our expert mortgage brokers will scour the whole of market to find products that meet your needs.
Applying for a mortgage
Once we've identified the deal that suits your circumstances, we'll help you apply for a mortgage. You will need to supply the following documentation:
- Photo identification (either a passport or driving licence)
- Proof of address (a recent utility or council tax bill)
- Three months of bank statements for all current accounts held
- Proof of deposit origin, including if it is a gift
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Self-employed mortgage applicants must also provide mortgage lenders with:
- Bank statements covering between 6 months and up to 3 years in some instances, depending on the lender.
- Business owners must provide both personal and business bank statements
- Proof of income, depending on your category of self employment:
If you're a sole trader or freelancer, you must provide 1-3 years personal tax calculations also known as a SA302 and supporting tax year overview.
Limited company directors or partners must provide the same information as above and, depending on the lender, will also be required to show evidence of dividends and retained profits. Therefore providing personal tax computations/SA302’s and a full set of company accounts will be required.
For contractors, they will be asked for proof of their day rate alongside contracts covering at least the previous 12 months and potentially up to 12 months ahead.
CIS/umbrella contractors are usually treated as employed though may need to provide 6 months' worth of payslips instead of the usual 3.
Banks and building societies can have different lending criteria but, no matter how complex your mortgage application, we'll support you through the entire process.
Calculating a self-employed person's income
As mortgage brokers, we've helped a wide range of people who are considered self-employed when it comes to getting a mortgage.
Our experience means we know that lenders can have different self-employed mortgage criteria: some are more comfortable with people who are self-employed than others.
Whether you're a company director or a contractor, we can help ensure you meet the lender’s needs before you apply for a mortgage.
When it comes to calculating how much a self-employed person can borrow for a mortgage, lenders will examine all your paperwork to assess how much income you have, before deciding any loan amount.
Not all lenders' calculation methods are the same. Again, whether you're a freelancer or you own your own business, we can help ensure you apply to a lender who is open to your form of self employment.
Our expert team will guide you through every stage of the mortgage application process, so you know what's happening and why.
Do self-employed people pay higher mortgage rates?
Unless you choose to apply for a mortgage with a higher rate, no. Approval for a mortgage application is dependent on your affordability, credit record and any deposit or savings you have.
If someone who is self-employed or owns their own business can demonstrate their income is stable and unlikely to change for the worse in the near future, there is no reason why they should pay a higher interest rate than a salaried employee.
That said, our mortgage brokers may find a product from a specialist lender that is ideally suited to your circumstances which may support more complex lending solutions. This could result in a higher interest rate being paid.
We will talk you through all the products available to you so you can make an informed decision before applying for a mortgage.
Improving your chances of securing a mortgage
Everyone, including self-employed people, can boost their chances of securing a standard mortgage deal by taking the following steps, if possible:
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Check your credit score
Lenders are more likely to give mortgage approval to applicants with a good credit score. You can check yours at https://www.checkmyfile.partners/PR6PZR/2CTPL/ This offers a 30 day free trial, then £14.99 per month unless you cancel your subscription. Cancel online anytime.
If you have a poor credit rating and the data has been proved correct, there are several ways to boost your credit score, from demonstrating that you pay bills on time to registering on the electoral roll.
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Prove your earnings
Self-employed people looking to get a mortgage should ensure they have an SA302 form from HMRC or a personal tax computation from their accountant. It can be secured after returning a self-assessment tax return and is robust proof of your earnings.
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Save for a healthy deposit
Having a reliable income will always be looked on favourably by mortgage lenders. However, the bigger your deposit, the less you are likely to borrow for a self-employed mortgage, which can please them even more.
This reduction in loan to value (LTV) will make lenders more likely to grant a mortgage to someone who is self-employed.
Find the right lenders
Our expert mortgage brokers know which lenders are more favourable to self-employed applicants and can save you the hassle of trawling the High Street.
We can advise on which lenders are likely to say yes to your application and get an agreement in principle, so you know how much you can borrow.
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Deal with debt
If you have credit card debt, pay back more than the minimum amount each month and steer clear of the maximum limit, so lenders can see how financially responsible you are.
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Get your paperwork up to date
People who are self-employed have to be more organised about their paperwork, but it's worth getting a certified accountant to sign off on your figures to demonstrate your steady income, and make sure all the most recent tax records are at hand.
Our team will help prepare all the necessary documentation before helping you apply for a self-employed mortgage.
Avoid risky properties
Another way to enhance your mortgage application's chances of being accepted is by buying properties that are conventional.
Listed buildings can have more risk, while some lenders shy away from properties above shops and other businesses.
Get a wide choice of self-employed mortgages with us
No matter your self-employed status, if you want to explore a range of mortgage deals, talk to us.
We understand the benefits and challenges of having a self-employed income. That's why we create bespoke mortgage solutions that meet the unique needs of each client.
We will guide you through every step of the mortgage process in a clear, transparent way, helping you succeed in your homeowner journey.
Ready to get started? You can email us at info@yourmortgageroom.co.uk or call 01273 039500. Alternatively, fill in this contact form and we'll get back to you straight away.