SELF-EMPLOYED MORTGAGES

Self Employed Mortgage Advisors

We are specialist self employed mortgage advisors, our expertise can help you to find the right self employed mortgage on the market to meet your specific requirements. From big high street banks and building societies to smaller, more niche lending companies, there is a lot of choice out there.

The brokers we work with are whole of market and offer completely unbiased advice – ensuring that you get the very best deals available. If you are looking for a self employed mortgage advisor, fill out a contact form online or call us now on 0300 124 5655

Scroll down for more information and FAQ’s about self employed mortgages.

How do I get a self-employed mortgage?

self employed mortgages

One of the big hurdles involved when going self-employed can be obtaining a mortgage. There are two main methods mortgage lenders use to assess self-employed income: via full accounts, or by year-end tax calculations (typically along with a tax year overview) from HM Revenue & Customs. Of course, you will need to provide a reasonable deposit and meet affordability requirements. But additional documentation will usually be needed – and it’s likely that a few more hoops will need to be cleared.​

Just like the salary man, you will need a mortgage deposit of at least 5% of the home value. One potential problem is that lenders typically only accept accounts certified by a chartered accountant. However, they have differing criteria in terms of how they assess your application. Some lenders set the amount you can borrow based on your previous few years’ income, while others calculate it based on only your previous year of trading. They also calculate your mortgage affordability differently according to your legal status: for sole traders and partnerships, lenders take net profits as income.

There are however lenders out there that will look at assessing income differently for self-employed applicants with certain trading styles.

 

Can I get a self-employed mortgage with 1 year’s accounts?

Yes, it is possible, but you will need more deposit. If you need to use a specialist lender you will need 15% deposit. If you have been trading above 18 months there is a high street option with 1 year’s accounts and projection for year 2 from your accountant.  Most lenders will require a minimum of 2 years trading history, some even 3 years.

 

Can a limited company director get a mortgage?

Mortgages for directors aren’t exactly plain sailing. After all, most businesses have a complicated back story. Maybe you’ve only been trading for a year or most of the company profits are retained in the business. The snag is that most lenders will base their approval on the actual declared income that company directors pay themselves (normally a mix of salary and dividends). Often this fails to adequately represent what they earn in total. Fortunately, there are lenders out there who will base their underwriting decisions on the share of net profits that company directors hold in their firm.

In other words, instead of looking exclusively at the salary and dividends that have been paid out, these specialist lenders will consider the real money being generated by the company – including the cash left in it. This makes a staggering difference as it enables you to considerably boost your borrowing power. It’s important to take independent expert financial advice before going down a niche route like this, however.

 

Can a sole trader get a mortgage?

The easiest and most common way to prove income is via tax calculation & tax year overviews. If you have completed your tax return with HMRC then they will issue these documents to you. They simply tell you what income has been declared and the tax to be paid and will also show any income from any rented properties or interest from savings and investments. You can download the information on the government gateway system.

There are options available for self-employed applicants from as little as 12 months trading history, however these options are limited and may be subject to restricted loan to values.

 

Can construction industry scheme (CIS) workers get a mortgage?

This is where life gets difficult for most CIS (Construction Industry Scheme) contractors. It can be hard for them to borrow sufficiently on a mortgage, mostly due to this preference of banks to make lending decisions based on profit AFTER expenses. If you don’t have three years of accounts or have declared a relatively low net profit due to writing off your expenses, then CIS-specific mortgages could be the answer for you. This way, you can apply using the gross income on your pay slips instead of presenting your business accounts or self-assessment.

To qualify for CIS scheme mortgages, you need a minimum six months of CIS pay slips, tax on the scheme deducted at 20% and a minimum deposit of 5%. If you have a history of bad credit, there are still lenders that will welcome your application. In fact, if you have no defaults or CCJs from the last 24 months, you can still be accepted at highly competitive rates.

 

Can day rate contractors get a mortgage?

As with CIS contractors, there are also lenders out there who will look at the day rate when assessing affordability, rather than going off the figures declared on the end of year tax return. Certain lenders will therefore look at day rate x 5 days x a number of weeks (ranging from 41 to 52 weeks depending on the lender).

With this set up the minimum time contracting tends to be better than that required when assessing as self-employed, with some lenders only requiring 3 months of contracting history (as long as you have 12 months previous employed history in a similar role) – they will likely require 12 months of the contract remaining at the time of application, however this can again vary lender to lender.

When compared to most lenders who would look to have a minimum of 2 years self-assessment tax returns to lend, this could get you on the property ladder much sooner than anticipated.

 

Can an IT contractor get a mortgage?

There are certain lenders out there who love IT contractors and have favorable set criteria specifically for them. Some lenders do not even have set minimum time of contracting (depending on how the contract is set up), with other options available with a minimum 3 months contracting track record. This will always be subject to a proven track record with the same industry and time left on the existing contract, which varies lender to lender.

 

Can fixed term contractors get a mortgage?

Fixed term contracts are typically for 3, 6, or 12 months, and can be on a temporary or permanent basis. There are lenders available who will look to lend based on the contract amount (rather than going off the self-assessment tax returns), and you would be expected to have been working on this basis for a minimum of 3-12 months depending on the lender).

Lenders would also like to see between 3-12 months left on a contract to show sustainability, or at least evidence that the contract is going to be renewed – this again will depend on the lender.

Things can get a little more complicated when the contract is temporary, through an agency, or paid via an umbrella company – however that is not to say they are impossible to arrange.

 

Can I get a self-employed mortgage with bad credit?

All the above categories have options available with bad credit mortgage lenders, so just because you have had a blip in your credit history that is not to say that you cannot achieve the level of lending you require.

Bad credit mortgages are available and will come down to the severity of the adverse credit and how recent the issue was. The mortgage experts we work with are highly skilled and arrange bad credit mortgages every day.

Bad credit mortgages are available and seeking the help of a mortgage expert will ensure you receive the best advice for your circumstances. Call us on 0300 1245655 or complete our quick enquiry form to speak to a mortgage expert.

 

Can I get a mortgage if I am recently self-employed?

This will be dependent on how recent you became self-employed. You would need to have been trading a minimum of 9-10 months and have a proven track record in your industry. Even with this, the number of lenders would only be small. You would also need a good deposit to strengthen your case.

 

How are self-employed mortgages calculated?

Every mortgage lender will use different calculations but will typically range from 4.5-5.0 times income. If you are a high earner (normally classed as over £100,000 per annum) you may be able to get to 6 x income depending on your profession, this will usually be assessed on a case by case basis.

Most high street lenders will do an average of your last 2- or 3-years self-employed income – however if you latest year is lower, they will use the lower figure, and if your latest year is higher, they will typically look at the average.

There are some lenders who will look to use your latest years self employed figures. This can really boost up the amount you can borrow, however if there has been a huge leap in profit they will want to investigate the sustainability of this level of income. To get the maximum borrowing potential you will need to use a whole of market mortgage broker. Our mortgage experts will be able to use all the information and present you with the best deals for your circumstances.

 

Can I get a self-employed mortgage with no proof of income?

No, the days of being able to self-certify your self-employed income have long gone. Residential mortgages are now fully regulated, every lender must ensure they do their due diligence in making sure the mortgage is affordable.

 

Self-employed additional income

If you have different income streams, these can also be considered for self employed mortgages. Below are a few examples.

  • Rental income received and declared to HMRC
  • Investment
  • Pensions
  • Trust income
  • Overseas income
  • Bursaries

Each mortgage lender will have their own criteria around these forms of income and which they will accept. Your mortgage expert will be able to provide you with the best borrowing potential for your circumstances.

 

I have been declined for a self-employed mortgage, what can I do now?

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 aspect of self-employed mortgages, and importantly 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 5565 or complete our quick enquiry form to speak to a mortgage expert.

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