Category: Self Employed

Getting a mortgage when you’re self-employed can be challenging, but it isn’t impossible.

One way of proving your income in the mortgage application is using your net profit amount.

You can apply for a larger mortgage if your net profit exceeds your income and dividends.

Here’s everything you need to know about getting a self-employed mortgage using net profits.

Can You Get a Self-Employed Mortgage Using Net Profits?

Yes. Some lenders allow you to apply for a self-employed mortgage using the net profit you generate as a sole trader or business owner.

They’re usually called net profit mortgages and differ from standard mortgages based on how the lender determines your affordability.

Instead of using your salary or other income source, the lender uses the net profit from your business to determine how much you can borrow.

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Can You Get a Self-Employed Mortgage Using Gross Profits?

Some lenders offer gross profit mortgages or self-employed borrowers, but they’re harder to find.

Most lenders will assess your affordability based on net profits because they provide a more accurate picture of the funds you have at your disposal after accounting for all expenses.

If you’re a sole trader or are self-employed, the gross profit is the total revenue or income minus the cost of goods or services sold.

However, it only gives an initial snapshot of your financial health before accounting for all other costs and expenses like rent and utilities.

The net profit considers all operating expenses, taxes, and interest paid on loans. Lenders use the net profit figure to determine how much they can afford to borrow.

Who Can Qualify for a Self-Employed Mortgage Using Net Profit?

You can qualify for a self-employed mortgage using net profit if you earn an income from a business you own outright or a business your share that generates profit.

Lenders will calculate affordability differently based on the nature of your self-employment. Eligible applicants can include:

Sole Traders

If you’re a sole trader, you can calculate your net profit by totalling all the income for the year and deducting your business expenses and operating costs.

If you plan on applying for a mortgage in the next few years but want to invest heavily in your business, professional advice can help you make an informed decision.

Partners

You can qualify for a net profit mortgage if you have at least a 25% interest in the partnership.

Your net profit as a partner will be calculated in much the same way as a sole trader and will involve deducting costs and expenses from the total income earned by all partners combined.

The profits are then distributed based on each partner’s contribution, so it’s crucial to ensure you keep accurate records.

Some lenders also require all partners to be signatories to approve loan applications.

Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

Company Directors

Most lenders will only consider a director’s salary and dividends toward affordability calculations.

If you’re a director of a company and have decided not to withdraw all your profits (retained profit), most lenders will limit your borrowing to the income you have drawn.

This is based on the argument that you should only borrow based on the actual personal earned and taxable income.

If you’ve technically not drawn the income, then it belongs to the company and not you.

However, not all lenders are the same. Some allow directors to use the retained net profits to count towards income when assessing affordability.

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What Income Evidence Do You Need to Get a Self-Employed Mortgage Using Net Profits?

Most lenders require at least two years of accounts as proof of income to qualify for a self-employed mortgage using net profits.

It’s still possible to get a mortgage if you’ve been trading for less than two years, but you’ll have a restricted number of lenders and products you can access.

In most cases, lenders use an average of two years’ accounts to assess affordability.

Some lenders can use the figure of your most recent income if it’s higher than the average, while others can use the lower of the two.

Mortgage providers prefer certified accounts, but they’ll also accept SA302 tax returns and recent bank statements, usually from the last three months.

How Much Can You Borrow with a Self-Employed Mortgage Using Net Profits?

The amount you can borrow will depend on the net profit, with many lenders using income multipliers for affordability assessments.

The lender takes your annual net profit and multiplies it by a set figure, typically ranging from three to five times your income.

For example: £60,000 income x 3 = £180,000 mortgage.

Most lenders allow you to borrow up to 4.5 times your income. Others limit it to three times, while some can go as high as five times.

How Much Deposit Do You Need?

The deposit requirements for a self-employed mortgage using net profits are similar to other types of residential mortgages.

Most lenders will expect you to put down at least 10%, but this could rise depending on the level of risk.

For example, if you only have a trading history of one year or less, the lender might ask for a 15% deposit to offset the risk. Some flexible lenders can also offer low deposit deals.

The terms available are usually restricted by the small pool of lenders who consider applications based on net profits.

You can access a higher number of mortgage lenders by having a deposit of 20% to 25%.

What are the Eligibility Criteria for a Self-Employed Mortgage Using Net Profits?

Lenders apply specific eligibility criteria, which can include:

• Credit history – Bad credit can make it challenging to access a mortgage, but you can find a suitable lender through a broker.
• Loan to value (LTV) ratio – This will determine the amount of deposit you need.
• Age – Some lenders impose age restrictions, such as requiring the mortgage not to exceed your 75^th birthday.
• Profession
• Property type

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Final Thoughts

Consulting an experienced, whole-of-market broker can help you secure the best deal on a self-employed mortgage using net profits.

Such mortgages are a specialist type of home loan, so you must approach the right lender who can approve the application based on your circumstances.

Call us today on 03330906030 or contact us to speak to one of our friendly advisors.

Getting a mortgage as a contractor can seem daunting, but it’s not impossible.

Non-traditional forms of employment like contracting and freelancing have become more popular, with around 4.44 million people in the UK currently working in self-employment.

Unlike before, it’s now simpler to get approved for mortgages for contractors, provided you approach it the right way.

Here’s everything you need to know about mortgages for contractors, so you can know what to expect and how to improve your chances.

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Can Contractors Get Mortgages?

Yes!

Mortgages for contractors are now more widely available and feature higher success rates as lenders update their criteria to accommodate the increasing number of people opting for non-traditional employment.

Mortgage options are available for different types of contractors, including:

• Fixed-term contractors
• Self-employed contractors
• Agency workers
• Subcontractors
• Umbrella company contractors
• Short-term renewable contractors
• Zero-hour contractors
• Professional contractors like teachers, medics or accountants

The type of contractor you are can determine how lenders assess your application.

Some can use your daily rate to determine how much you qualify for, while others will consider how long you’ve been a contractor, your average annual earnings, and the consistency of your working patterns.

How Is Income Assessed for Contractor Mortgages?

Lenders generally look for proof of income over a certain period.

Some may require you to show them a track record of at least three years’ worth of revenue, while others can accept two years of accounts, one year or as little as six months.

You must show lenders concrete evidence of how much you earn, so ensure your accounts and taxes are documented and up to date.

The net income declared in your accounts, and tax assessments can help lenders determine your affordability, and how your income is structured can affect the assessment.

Most lenders conduct assessments on a case-by-case basis and will have specific benchmarks for contractors and other non-traditional workers depending on the way you work and how you’re paid.

Some lenders can use your average income for a few years or your lowest annual figure, while others will incorporate evidence of future contracts.

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

How Much Can You Borrow with Mortgages for Contractors?

Your borrowing limit can vary depending on how much you earn, the type of contractor you are, and the lender, as they use different methods to assess affordability.

Mortgage offers can be based on your average income over 2 to 3 years or your lowest income figure.

Some lenders may offer up to three times your annual income, while others can lend up to four or five times your yearly income.

Some lenders allow you to include all your commissions or bonuses and apply income multiples to determine how much you can borrow.

However, others cap the commission or bonus earnings you can declare.

Most providers generally use your contracted day rate to calculate how much you can borrow through the following formula:

• Day rate x the number of days you work every week = weekly income
• Weekly income x 48 weeks = the annual income
• The annual income x 3 or 4 (depending on the lender’s income multiple) = the maximum mortgage you qualify for.

Other criteria determining how much a lender will lend to you include how long you’ve been a contractor, your monthly outgoings, your credit score and any other loans you may have.

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What Deposit Is Required for Mortgages for Contractors?

The amount of deposit you’ll need as a contractor will be similar to other borrowers, and will typically be 10% for contractor mortgages.

The larger the deposit you can put down, the better the interest rates and terms of the deal.

A higher deposit will help lower your loan-to-value (LTV) ratio and give lenders confidence that you can comfortably afford the mortgage.

You’ll have limited options if you have a lower deposit or no deposit, and you may need to use government schemes like Help to Buy or incorporate support from a family member through a guarantor mortgage.

What Documents Are Needed for Mortgages for Contractors?

The documents you’ll need to secure a contractor mortgage can differ slightly from traditional mortgages and can include the following:

• Suitable identification
• Copy of current contract
• At least three months’ bank statements
• Invoices or profit and loss statements
• Proof of day rate and experience
• Tax calculations

Can You Get a Contractor Mortgage if Your Contract Is Ending?

Lenders require that you have at least 6 to 12 months remaining on your contract when submitting a mortgage application.

It gives the lender confidence that you have enough time remaining before looking for and agreeing to future work opportunities.

You can also speak to your lender if your contract ends sooner and present proof or information that makes you a trustworthy and dependable borrower.

Such information can include:

• Your experience in the industry you work in
• Your track record as a contractor
• History or regular contract renewals
• References from regular clients or employers
• Any new contract you’ve already secured or agreed on

How To Improve Your Chances for Mortgages for Contractors

You can take a few steps to strengthen your application and improve your chances of qualifying for a mortgage for a contractor, including:

• Check and improve your credit

An adverse credit report can tell lenders that you can’t stay on top of your finances and make it challenging to get approved.

Ensure you check your credit report, correct any misinformation or missing details and register on the electoral roll.

• Save as much deposit as you can

The bigger the deposit, the better, as it can help improve the lender’s confidence and ensure you get the best deal available.

• Improve your finances

Get your finances in order by eliminating unnecessary outgoings or spending a few months before applying.

Avoid maxing out your credit cards and stay away from unnecessary loans that can affect your borrowing capacity.

• Offer security

Some lenders will consider assets like luxury items, property, or jewellery as collateral to approve your application.

If your parents are willing, they can support you using their savings or equity and help you get on the property ladder.

Mortgage for Contractors Final Thoughts

Getting a mortgage for contractors is all about finding the right lender for your situation.

Consulting a mortgage advisor or broker specialising in mortgages for contractors can ensure you get the best advice and increase your chances of success.

Ready to remortgage?

Whether you want remortgage to find a lower interest rate, or raise money for home improvements, we may be able to help you find a better rate.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

As HMRC continually develop, sometimes the SA302 form may change ever so slightly either within the layout or the terminology used for headers for example.

In this guide, we will discuss the current SA302 form including what the form is for when it may be required and the process of obtaining one.

What is an SA302 Form?

An SA302 is a document created by HMRC that is commonly required for those who are self-employed in order to prove their income when submitting a mortgage application.

The document provides an overview of an individual’s tax calculation, containing details of all taxable income streams and tax liability.

Each SA302 form covers one financial year and therefore should the potential lender require proof of income for more than one year, further forms will need to be requested.

While SA302 documents are generally required by self-employed people, those who are employed and therefore receive PAYE income but also have other income streams may also require an SA302 form to clarify their total annual income figures to a potential lender.

There is strict legislation within the UK that lenders must abide by, including the requirement of obtaining proof of income from mortgage applicants in order to review an applicant’s suitability and affordability for the chosen financial product. Obtaining and submitting SA302 forms is one method of proving income.

Each SA302 document contains two parts as follows:

• A tax calculation covering the relevant tax year, summarising the figures submitted via a self-assessment including the total declared earnings and tax payable
• A tax overview, indicating the status of the tax payments

The SA302 document is also known as a Tax Calculation Form and is often the easiest way for a self-employed person to prove their income, as most lenders accept the documents.

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Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

How Can I Obtain my SA302?

HMRC have phased out issuing SA302 forms automatically and therefore a request would need to be submitted in order to obtain the documents via:

• Downloading a copy online – The quickest and easiest method of obtaining your SA302 form is to download a copy from the HMRC website. To do this, navigate to your HRMC online self-assessment account and log in. Once logged in select ‘more self-assessment details’, then ‘get your SA302 tax calculation’.
  Up to 4 years’ worth of SA302 forms is available via the HMRC website if the person has been self-employed for the duration of this period and submitted annual self-assessments.
• Calling to request a copy – The documents can be requested via the telephone, however, please note that it can take up to two weeks for the copies to be received via post.
• Requesting a copy via your accountant – If you have an accountant, they can produce a summary of annual earnings via their commercial accounting software which is also used to perform the self-assessment tax return itself on the person’s behalf. The accountant would need to certify the summary document in order for the paperwork to be accepted by a potential lender.

It is important to be aware that the timing of the document request will be vital in relation to the mortgage application.

The document must contain the relevant financial year’s figures as required by the potential lender and therefore is also linked to the annual self-assessment submission deadlines to ensure that the relevant year’s details have been captured.

Often lenders will require SA302 forms to be dated within 18 months of an application, and up to four years’ worth of documents.

Therefore, to avoid any delays during the processing of any mortgage application, it is worth checking how many years’ worth of proof of income is required for the underwriting process for the potential lender.

Some lenders may also require additional information to prove income such as assigned business accounts, and therefore it is also worth clarifying the requirements ahead of making an application.

It is also important to check the details included on an SA302 for any discrepancies before submitting them to any potential lenders as sometimes there are differences between the figures of the tax due on the Tax Calculation and the Tax Year Overview, which should match.

If you find any discrepancies, highlight these either via your accountant or with HMRC in the first instance.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

SA302 Example Summary

In this guide, we have reviewed what an SA302 document is, what information the form contains, the purpose of the document and the process of obtaining an SA302.

We have also discussed the legislative reasons why lenders require specific documents that prove an applicant’s income levels as part of the mortgage underwriting process.

Should you require any further assistance in submitting a mortgage application or proving your income, please contact us to arrange a consultation with our expert team of brokers.

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As a specialised mortgage broker, we can also provide advice on the best approach to take as a self-employed person seeking a mortgage or re-mortgage, tailored for your personal circumstances, investigating the suitability of specific financial products ahead of making any applications, in order to protect the applicant’s credit score and ease the stress of the mortgage application process.

As with any big financial decision, it is highly recommended that independent financial advice is sought ahead of committing to a specific option, to ensure that all terms are fully understood, the option is the most favourable for the applicant and that the repayments can be made comfortably.

In addition, it is important to note that with any secured lending, the ultimate consequence of defaulting on the mortgage could mean that the property is repossessed by the lender.

Call us today on 01925 906 210 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Many limited company directors wrongly think they will not be able to obtain a mortgage because of the way they declare their income.

While some high street lenders prefer clients to be employed, there are lots of other options available if you know where to look!

Mortgage for Limited Company Directors – What is it?

A LTD company director mortgage is simply a mortgage for a client who is a LTD company director!

There are quite a few misconceptions that directors are unable to get mortgages or that they require a special type of mortgage – this is not the case!

You just need a good adviser who understands how the income is calculated and what can be used.

Often directors are advised by their accountant to take a moderate salary from the business and then top this up with dividends – because of this a lot of profit can be retained in the business itself.

Some high street lenders will only look to use the salary and dividends taken from the business – which is why you need an experienced adviser to help you navigate the lender’s criteria!

There are other lenders who will look to utilise the retained profit that remains in the business to boost the amount you can borrow.

How many years trading do I need?

Quite a lot of lenders prefer you to have two years’ worth of accounts and most prefer to take an average of the last two years. An example of this would be:

Latest Year	Previous Year
Salary £25,000	Salary £20,000
Dividends £20,000	Dividends £15,000
Total Income £45,000	Total Income £35,000

Average of the last 2 years – £40,000 annual income which using the same 4.49% multiplier would give you a maximum mortgage amount of £179,600.

However, there are lenders who will use the latest year only! Or who are happy with only one-year trading.

Each and every situation is very different – If you are a LTD company director needing some advice to, purchase, remortgage or refinance get in touch today and we can help find your best available option!

What income can I use?

The most commonly used income for a limited company director mortgage would be salary and dividends, this could look something like this:

Salary – £25,000

Dividends – £15000

Total assessable income – £35,000

The majority of lenders will use an income multiple of around 4.49% which means they will take your annual income of £35,000 x 4.49 to give the approximate amount they will lend to you. In this case, this would give us a figure of £157,150.

Now, this may not be enough to get you the home that you are looking for!

Let’s say you have the same £25,000 salary but you have a net profit of £50,000 we can look to use both of these so the same calculation would give you a maximum mortgage amount of £336,750 – what a huge increase from £157,150!

There are lenders who will also take, operating profit in the same way!

It’s all about getting the right advice from the right adviser and planning in advance!

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What documents will we ask for?

This really will depend on the lender we are looking at along with what type of income we are using for you, a good baseline would be the following:

• Latest 2 years SA302 (Tax Computations)
• Latest 2 years Tax Year Overviews
• Latest 2 years Company Accounts
• Latest 3 months bank statements (personal and business accounts)

The reality is that lenders differ in the type of information they request, some will only one part of the above, while others will request the documents in full.

SA302 forms can be downloaded online from the HMRC portal. You can also opt to receive your SA302 through the mail, but it can take up to 14 days.

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How much deposit do I need for a limited company director mortgage?

The deposit requirements for a director is no different than it would be for an employed client. A minimum of 5% of the property value would be needed.

Shared ownership and help to buy purchase options are also available to limited company directors.

The main thing to remember is that a deposit has the potential to reduce the LTV, so the lower you can make it, the greater chance your application will succeed.

A lower LTV will give you much more choice in terms of both rates and offers from lenders. For instance, a deposit of 10% can get you a reasonable deal, while a 50% deposit will likely open you up to the best possible mortgage rates.

If you have a poor credit history and need a bad credit mortgage, then you are likely to require a deposit of at least 10%.

If you have any questions or concerns about your particular situation, feel free to contact us and one of our mortgage brokers will be able to assist you further.

How much can a director borrow?

Traditionally, lenders have based their maximum mortgage amounts on income. However, after the Mortgage Market Review, mortgage providers also analyse applicants outgoings as well as income.

The reason for this is that it allows lenders to gauge a more accurate picture of an individuals affordability status.

Why? The major thinking is that a person’s outgoings are as important as income. Assessing both enables lenders to determine if you can afford to make regular mortgage payments.

Mortgage providers use your stated income as a preliminary guideline but ultimately will take a look at your entire financial situation to determine the maximum amount you can borrow.

I own 50% of a Limited Company Business – will this impact what I can borrow?

Yes – if you own 50% of the business, we can still look to utilise the salary and dividends you have taken. However, if we need to use your net profit we would only look to use 50% of this. An example of this can be seen below:

Salary: £25,000

Net Profit: £50,000 – we would only use 50% of this = £25,000

Total income: £50,000 x 4.49 = £224,500!

This would work for any amount of shares of the business owned above 25%

Mortgages for directors with bad credit

Mortgages for directors with bad credit will be limited since not as my lenders are offering to lend to these applicants. There are many different types of or credit history and everyone’s situation tends to be a little different, therefore, there isn’t a blanket set of rules of all people.

Specialist lenders will typically analyse your poor credit history based on how long ago it occurred and the intensity.

Ultimately, if you are asking “my credit history is poor, can I still get a mortgage?”

Yes – there are specialist lenders out there who will still consider the application, however, they will likely request a larger deposit of around 15% of your purchase price.

Applying through an independent bad credit mortgage broker who has access to a large range of lenders will be your best option.

The specialist lenders available will take a holistic view of the application considering things like age, the severity of the credit issues and the reason this happened e.g. a significant life event happened.

Will I get the best rates?

This will depend on the amount of deposit you have available! The bigger your deposit, usually the better the interest rates you will be eligible for!

You would be able to look at the same rates as an employed applicant so you will not be penalised for being self-employed!

It is important to remember that lenders will complete a credit check on you upon application, so ideally try not to apply for large amounts of credit or make large changes before you apply!

My company has made a loss, is this a problem?

If your company has filed a loss in the most recent year, the majority of lenders wouldn’t be happy with the risk that you could be in financial difficulty. If the loss was two or three years ago and you have made a profit each year since lenders would be much happier with this.

If you did make a loss in the most recent year and this was solely due to salary or dividends then there could still be options available, however, you will require an experienced adviser who understands the lenders underwriting process and who can explain this correctly to the underwriter.

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Now the really good news. We have specialist advisors based in our team that are available to speak today, call us on 01925 906 210 or send us a message.

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Prior to the infamous credit crunch of 2007, the self-employed could apply for a ‘Self-Certification’ mortgage.

With these loans, the self-employed did not have to prove their income; they just informed the mortgage provider on what they earned, which inevitably led to problems.

The self-certification mortgage was eventually dubbed as the ‘liar loan’ as people abused the system by exaggerating their earnings to gain a bigger mortgage.

Unsurprisingly, this led to a ban on self-certification mortgages in 2014.

These days, if you’re self-employed you need to prove to a lender that you have a reliable income that can cover the monthly repayments of a mortgage, as well as meet a number of additional eligibility requirements.

What Counts as Self-Employed?

A mortgage lender will consider you to be self-employed if you own over 20% to 25% of a business that is your main source of income. You could be a company director, contractor, or sole trader of the business.

How to get a Self-Employed Bad Credit Mortgage

If you’re self-employed, you should still have access to the same mortgages as everyone else and meet the standard eligibility and affordability requirements of your lender. However, since you don’t have an employer that can confirm your earnings, you may be asked to provide considerably more evidence of your income than other borrowers would.

Who can get a Self-Employed Mortgage?

The majority of mortgage providers will consider self-employed people for mortgages if they have been trading for at least three years and have two years of self-assessment tax returns and/or accounts.

What Paperwork do I need for a Self-Employed Bad Credit Mortgage?

There are a number of things you will need to provide in order to sufficiently prove your income to a mortgage lender. They include, but may not be limited to:

• At least two years of certified accounts for Ltd Companies, preferably prepared by a qualified chartered accountant to determine the average profit earned over the previous few years. It is always favourable if your profits increase year after year as opposed to declining.
• Your tax year overview (SA302 forms) for at least two years.
• Proof of future contracts, if you are a contractor or if you are a company director, evidence of retained profits or dividend payments.
• Passport and/or driving licence.
• Latest council tax bill and/or utility bills from the last 3 months.
• Bank statements for the last 3 months. This will show lenders the extent of your outgoings, not just on bills, but on the likes of hobbies, socialising, holidays, travel, childcare, food, and other outstanding loan repayments, such as credit cards, car finance, and store cards. This is so a provider can be sure that you can afford your mortgage repayments each month.

If you’re self-employed and only have a year or less of accounts it will become more difficult to secure a mortgage, as your lender will find it difficult to determine if you can afford it. In this situation, you are likely to be asked to show evidence of regular work, future commissions, and contracts for impending work.  You should also be aware that you may have a limited choice of mortgages.

Improving Your Chances of Securing a Mortgage with Bad Credit

If you’re self-employed there are a number of ways that you can increase your chances of securing a mortgage, which include:

• A Large Deposit – Put together as big a deposit as you can. The larger your deposit the better the chance of securing a mortgage.
• Improve your Credit Rating – Check your credit report and do what you can to improve your credit rating, such as making other loan repayments on time, getting on the electoral roll, and keep balances on credit cards low.
• Reduce Credit Checks – You may not know this, but multiple credit checks over a short space of time can reduce your credit score. Comparison sites can run multiple credit checks to steer clear of them if possible.
• No Payday Loans – Mortgage providers don’t look too favourably on payday loans, and they often indicate to lenders that you are in financial difficulty. In fact, many lenders will refuse your application outright if they see you have a history of using payday loans.
• Avoid Certain Properties – Lenders will be more reluctant to offer mortgages on old or unconventional properties, or flats above commercial properties.
• Get an Agreement in Principle – It is hard to even view properties without an agreement in principle. So speak to a mortgage broker and work on getting one put in place, which will confirm the maximum mortgage amount you could be eligible for. This will help with a mortgage application in the future.
• Speak to a Mortgage Expert – A mortgage expert or broker will have access to the whole market, so will be able to find you a lender that is best suited to your situation.

Getting the Best Bad Credit Mortgage Deal

Your best option is to approach a specialist broker. They will have the necessary knowledge and expertise in current mortgage providers to best place your mortgage depending upon your income types.

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The mortgage rate you are offered is most likely to depend on the size of deposit you can put down. The bigger the deposit the better the rates. This is also true for your credit rating – a better credit rating tends to mean better interest rates. However, if you get turned down by the mainstream lenders, you may have to pay a higher interest rate with a specialist lender.

Are There Bad Credit Mortgages for the Self-Employed?

Yes, there are mortgages that are catered towards those who have bad credit and are self-employed.

A mortgage expert will be able to find you a mortgage provider that specialises in these mortgages for the self-employed. These lenders are used to dealing with clients that are higher risk and as a result, will consider borrowers with one or more of the following credit issues on your file:

• No credit history or a low credit score
• Late payments, defaults, or missed mortgage payments.
• Payday Loans
• County Court Judgments (CCJs)
• Individual Voluntary Arrangement (IVA)
• Debt Management Schemes
• Repossessions
• Bankruptcy

Specialist lenders will look at the age and the severity of the credit issue on file. Put simply, the older and less severe the credit issue, the better. They will also take into account how closely you meet other affordability and eligibility requirements. You may also need a larger deposit.

Self-Employed Mortgages Dos and Don’ts

To summarise these are the dos and don’ts of self-employment mortgages. Follow these little tips and you will find the whole process a lot easier.

Do keep up-to-date records of your accounts, including incoming earnings and expenses.

Don’t underestimate your earnings when completing your self-assessment tax return to lower the amount of tax you have to pay. The less it appears you earn, the less you will be eligible to borrow.

Do hire a chartered or certified accountant to prepare your tax returns so a lender can trust the assessment of your earnings.

Don’t just assume you won’t be able to get a mortgage if you’re self-employed as there are many lenders out there that specialise in lending to the self-employed.

Do speak to a mortgage broker to discuss your options – contact us today to start your application for a self employed mortgage.

Contact us today to begin your application for a self-employed mortgage.