Mortgages if you are self employed
There are a number of myths that I often hear when it comes to mortgages if you’re self employed. In actual fact, it shouldn’t be any harder for a self employed person to get a mortgage than it is for an employed person. So long as you have all of the documents that are required to evidence income.
When it comes to mortgages if you are self employed, income is typically verified by SA302 or ‘tax computation’ documents. Additionally you will need to provide the ‘tax year overview’ documents to support each tax year. Tax computations and tax year overviews can normally be provided by your accountant fairly quickly. Some lenders allow an accountants certificate to verify income. However, you will still need the income figures up front to establish if the mortgage is affordable. Therefore it is always best to provide the tax computation at the very beginning.
"When does this self employed mortgage start to get tricky?"
For you, the client, it should never feel like hard work. That’s assuming you are using an expert mortgage advisor. Someone like myself for example! That’s because we do all of the hard work for you. All you need to do is provide us with all of the required documents and information at the start. That then allows us to focus on providing you with our excellent service and delivering you the mortgage you need.
"But I was told you can't get a mortgage if you are self employed?"
We help self employed people obtain mortgages all of the time. The fact that someone is self employed will not be the only influencing factor as to whether they can or cannot get a mortgage. In fact, a large percentage of our existing clients are self employed:
- Company directors
- etc etc!
We help people who are self employed get a mortgage all the time. Relax!
"I've only been trading for 1 year. Do I need 3 years accounts?"
We work with lenders who can offer a self employed client a mortgage with only 1 years accounts. You will need to have your personal self assessment fully submitted so that you have the tax computations and tax year overview documents from your accountant. But a mortgage based on 1 years income as a self employed person is quite common. Of course it becomes a slightly more niche market. But that’s the advantage of using an expert mortgage broker. We know exactly where to take your mortgage case.
"I'm a contractor - can I get a mortgage?"
The first question is – do you actually have a contract? A contract needs to have some important details on it:
- How long is the contract term – 3 months, 6 months, 12 months?
- What is the hourly rate or a day rate?
- How many hours/days are you contracted to work each week/month?
If you have a contract with that information on, then we have got something to work with. Again, contractor mortgages are of course a more niche area. But we are used to helping clients who are contractors. We know exactly what to do to process an application for a contractor.
"John down the pub told me that you need a perfect credit score to get a mortgage if you are self employed?"
As a general rule, when it comes to mortgages, we would always recommend that people spend more time listening to an expert than taking advice from ‘John down the pub’!
The fact that a person is self employed does not mean that they must have a perfect credit score to qualify for a mortgage. There are plenty of options available for self employed clients that have a less than perfect credit history. We have helped many clients in the past with defaults, CCJs, even historical bankruptcies. The longer it has been since the adverse credit took place, the better chance you will have of getting a mortgage. If you have had a huge default 2 weeks ago that is not going to do you many favours. However, an unpaid parking fine from 2 years ago is a totally different situation.
There are lots of options when it comes to adverse credit. To give the best advice it is essential to see a copy of your up to date credit report. For this you can sign up for a free trial with Experian or Equifax. Also Credit Karma offer free access to you credit report.
"That doesn't seem so bad after all! "
If you would like more information or to arrange a call to discuss your situation, either submit a request using the contact page or feel free to call the office on 01332 985528.