That’s the usual response isn’t it? Laughter. And it’s entirely understandable. Since the Crunch in 2007, lenders have been playing tough with the employed, so the self-employed have no hope of obtaining a mortgage offer. Or do they?
You’re different, but not that different.
When any employed individual or couple look for a mortgage there are criteria that they need to meet or demonstrate. This might be via their employment contract, bank statements or pay slips. It’s the same for the self-employed. There are boxes that you need to tick, but you are not precluded from obtaining a mortgage. Not in the least!
The self-employed can be an attractive proposition to lenders.
It’s true! Many self-employed people really do take a salary every month, and therefore have a regular income. In fact, in 2016 there were 4.7 million people in the UK who were self-employed.* Lenders would be foolish to ignore this number of potential clients. So whilst many lenders may want to look at you carefully; look at you they will.
Ticking those boxes.
If mortgage lenders are looking at the self-employed carefully, what exactly are they looking for? In simple terms, they’re looking for proof that as with any employed person, you have been earning consistently, can afford the repayments and are highly likely to continue to do so in the future. In real terms this usually means (but may vary from lender to lender) that you have been trading for at least three years and have two years’ worth of accounts.
Proof of earnings for sole traders and those in a partnership can be supplied via your SA302 and a tax year overview, which verifies your SA302. For those with a limited company that receive both salary and dividends, the lender will want to see proof of these. Again, an SA302 may be required along with a letter from your accountant and a copy of your last year’s accounts.
So you see the idea of a mortgage for those who are self-employed is not a hopeless or laughing matter. It’s a very real possibility. If you are self-employed and would like to explore the potential of obtaining a mortgage, please talk to us today! Call 0844 69 333 60 or click here to contact us.
Lender requirements will vary and your home may be at risk if you do not keep up your mortgage payments.
*telegraph.co.uk accessed 23 November 2017