If you are self-employed, you may have been told that you stand no chance of getting a mortgage. While it can be more challenging for self-employed people to secure a deal, it is not impossible. There are a lot of lenders who will offer self-employed people mortgages, yet the process can be a little bit different, so it is vital to keep this in mind. Below, we will explain more about self-employed mortgages, as well as providing you with plenty of advice and tips on securing this sort of mortgage. 

Getting your finances in order

Getting your finances in order is the most important step when applying for a self-employed mortgage. You need to make sure that lenders are able to clearly see how much you can afford to pay per month. This will all depend on whether you identify yourself as a contractor, sole trader, or you are the director of a limited company.

If you are a freelancer or contractor working through a limited company, getting a mortgage is more difficult, and you will need to share your current contract with a proposed lender. Some mortgage providers will want you to have a contract for the past 12 months as well. If this is not feasible, the lender will often revert to utilising your company accounts or personal tax returns. 

If you are a sole trader, you need to ensure that you have at least one year of finalised accounts, as well as an SA302 form and the accompanying tax calculations from HMRC; these must be no longer than 18 months old. Once you have completed and filed your Self Assessment, you will be able to request this form.

If you are the director of a limited company, you need to supply your company accounts for the latest tax year or your Self Assessment tax return for yourself (they will generally want to see both personal and company accounts). There are some lenders that will want to see between two and three years of accounts, but there are still some lenders that are satisfied with just one year, for this reason talking to a whole of market broker who knows the specific criteria of each lender can make the process much simpler. 

It’s all about showing you can afford the mortgage

When it comes to applying for any sort of loan, especially a mortgage, it is all about showing that you can afford the repayments. A lot of lenders are worried when it comes to self-employed people purely because they do not think that they will have a steady flow of income coming in every month. Therefore, it is all about getting the documents together to prove that you are in a position to afford the repayments. 

Other things you can do to boost your chances of getting a mortgage

There are a number of other things you can do to increase your chances of getting a mortgage if you are self-employed. Firstly, work on your credit score. If you do not have a good credit score at the moment, the best thing to do is to put in the effort to increase your score before you start house-hunting. There are lots of different ways that you can go about increasing your credit score. Of course, the most obvious step to take is to pay off any of the debts that you have at the moment. This will also help you to secure a bigger mortgage because it is going to reduce the amount of monthly payments that you need to make as well. 

Aside from this, it is a good idea to make sure you do not make any credit applications for the six months before getting a mortgage. Doing this shows that you rely on lending money and this is something that will work against you when it comes to applying for that all-important self-employed mortgage, so this is something to keep in mind.

There are other things to think about:

  • Ensuring your are registered on the electoral roll
  • Ensuring your bank statements go to the same address as you are registered to on the electoral roll
  • Not going overdrawn!
  • Not going over your credit limits on your credit cards!

Of course, when you use a whole of market broker service like ours, (remember we don’t charge a fee) we can give you the tailored advice required to ensure you are in the best possible position to secure the mortgage you need for your home.

Contact us today for more information and mortgage advice

If you are self-employed and you would like to know more about your options in terms of securing a mortgage, please do not hesitate to get in touch with us for more information. We have many years of experience in the industry and access to the whole of the market, so know which lenders are doing what in terms of multiples of your income etc and our aim is helping you to find the perfect mortgage for your individual requirements.    If you are looking to get a mortgage or a remortgage and are self employed don’t worry about the mortgage process, instead either send us an email or chat via the chat icon on this site and we will arrange a no obligation conversation and remember you will not pay us a broker fee for you support. 

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We need to be honest with you… Your home may be repossessed if you do not keep up repayments on your mortgage.