1 year self employed mortgage

Updated September 2020

Can i get a 1 year self employed mortgage

It is now estimated that 4.8 million people in the UK are self employed. This means that the number of self-employed workers now accounts for around 15% of the working population. It’s no wonder we get asked the question “Can I get a 1 year self employed mortgage.” on a regular basis. Yes, it is possible, but is down to several factors. Before the credit crunch self employed borrowers simply had to sign to say how much they earned, effectively “self-certify” income. However, high street lender will now look for a minimum of 2 or even 3 year’s trading depending on the lender.

To get a 1 year self employed mortgage you are going to need a specialist lender. Engaging a mortgage expert to help you choose the right lender and submit the application, with most specialist lenders only accepting applications from mortgage intermediaries.

How do lenders calculate how much can I borrow?

The information used to calculate your income will vary from lender to lender, some will work off salary & dividends or salary & net profits. Others may look at day rate or contract values for contractors trading under a limited company. All lenders will need to see your tax calculations & tax year overviews. Your accountant can provide these or you can contact HMRC direct. Some lenders will also request an accountant’s certificate. This will be to check that the business is sustainable, with this some lenders requiring the accountant to have certain qualifications.

I haven’t finished my first year trading, can I get a mortgage?

If you haven’t completed a tax return for your first year then no high street lenders will lend to you.

There are a couple of specialist lenders that might consider a mortgage without you having finished your first year trading.

Mortgages without 1 years accounts didn’t exist because the lender will have  to evidence that they have approved the mortgage responsibly.. If you don’t have anything showing what tax you’ve paid, even if you have had a great first few months and earned more than you needed, this doesn’t class as evidence to the lender.

If you have been trading for 10 months then it is possible to get a decision agreed in principal based on your earnings, you can then look for properties and be in position to put an offer in. You wouldn’t be able to submit a mortgage application until you have the 12 months to evidence the income.

So, if you think you’ll earn 40k, they can enter this figure to get a decision based on your accounts showing this figure when they are completed.

Can I get a self employed mortgage with 1 year’s accounts if I have bad credit?

Bad credit mortgages with one year’s accounts are possible through a select number of lenders. However. due to the previous bad credit the amount of deposit required would be a minimum of 15%, The interest rate will be slightly higher than high street rates to reflect the risk to the lender.

As with any mortgage application the severity of the adverse credit will determine which options would be available. The more deposit you have the better the options will be.

To read all about bad credit mortgages click here

Can I get a self employed mortgage with a high street lender with 1 year’s accounts?

There are options with high street lenders with one year’s trading, this is very much down to underwriter referral and loan to value dependent. Once again using a specialist broker with in-depth knowledge is the key to getting these mortgages approved.

It will help if you have previous experience in the same line of work. For example being a recruitment consultant for 5 years  and then setting up a recruitment business. The lender could then see some background before you started the business.

Why is it harder to get a mortgage with 1 year’s accounts?

When looking for a mortgage with 1 year’s accounts its more difficult. With only 1 year’s accounts this is only a short space of time and perceived as more risk to the lender.

The days of self-certified mortgages are long gone. Once upon a time you could just tell the bank what you earned and they would lend on that basis. The difficulty people with 1 year’s accounts have is getting the amount they need to borrow. With any new business there are start up costs and these are particularly true in the first year.

The amount of new businesses which are starting up and people going self employed is rising.

What evidence will I need to show for my mortgage?

Depending on your trading style, if you’re a sole trader or working in a partnership, it will be your net profits. You can show this by either tax calculation & tax overview or certified accounts.

Mortgages for limited company directors will mainly be assessed salary & dividend. Some lenders will use the net profit and require the accounts to be certified by a charted accountant or similar qualification.

You can download your tax calculation & tax year over by clicking here

Speak to a 1 year’s self employed accounts mortgage expert

There are many lenders available ranging from high street to specialist lenders. Most people go to their own bank, get declined or can’t borrow what they need – just because one lender has declined you, don’t give up.

Our mortgage experts will look at each case before deciding which lender is right for you and your individual circumstances. All the mortgage brokers we work with are whole of market and offer unbiased advice. They will have access to all the specialist lenders to really enhance your chances of achieving the mortgage you need.

The expert brokers we work with have experience in dealing with all aspects of self employed mortgages with 1 year’s accounts. Our experts will be using the whole of the market to access the very best deals available.

To find out how we can help call us on 0300 124 5655 or complete our quick enquiry form to speak to a mortgage expert.

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