Is being approved for a mortgage harder when you’re self-employed? That’s the million dollar question. And the answer is simply, it doesn’t have to be!
Yes, there might be a few extra hoops to jump through during the process, but getting a mortgage as a self-employed person is certainly not off the cards. We’re going to bust some of the myths surrounding self-employed mortgages.
Who does the lender consider ‘self-employed?’
If your business is registered as a sole trader, a limited company or a contractor, you’ll be considered self-employed in the eyes of the lender. If you own between 20-25% of a business or more or it’s the business from which you make your main income, this will also put you into this bracket.
Do I have to do anything differently to the standard mortgage procedure?
While you’ll be applying for the same kind of mortgage as an employed applicant, as a self-employed person, you’ll need to submit some different documentation to the lender to prove your income and a track record of your income being ‘steady’.
- Two or more years worth of certifiable accounts (some lenders may be willing to take one year if you have previously been employed in a similar role. For example, if you previously worked for a company as a plasterer and then decided to start your own business as a plasterer)
- HMRC tax overviews for at least the past two or three years
- Anything that can prove your upcoming work (this is particularly important if you’re a contractor)
- Evidence of any dividend payments or retained profits
Make yourself attractive to the lender
In terms of preparing to make your mortgage application, the same overall advice will apply to a self-employed applicant. Things such as taking steps to improving your credit score, clearing debts, saving a healthy deposit and making sure you’re registered on the electoral vote will all work in your favour when it comes to making a successful mortgage application.
Everyone’s personal circumstances will have an impact on their mortgage application. If in doubt, it’s always a good idea to speak to one of our mortgage advisers to get some advice before making a start. They’ll be able to help you find the right way forward for your needs.
Are self-employed mortgage rates higher?
No. There is no such thing as a ‘self-employed mortgage’. You apply for the same types of mortgage as an employed applicant does. As with any mortgage, your interest rate (and therefore monthly payment amount) will depend on various factors, such as the size of your deposit, credit score and loan to value (LTV).
Mortgage advice for self-employed applicants in Sunderland
Whether you’re an experienced property connoisseur or you’re a first time buyer, it’s natural to have plenty of questions about the product that’s right for you. That’s where our mortgage advisers step in. We’re here to answer your questions and bust those myths about what you can and can’t achieve.
To arrange a free, no-obligation appointment with one of our mortgage advisers in Sunderland, please call us on 0191 4018229 or send us an e-mail.