Self-Employed Mortgages
Getting a mortgage when self-employed is one of those things that most people think is ‘tricky’. However, it is not more or less difficult to get a mortgage than it is for our employed friends. The truth is Self-Employed Mortgages don’t have to be difficult!
Self-Employed Mortgages and affordability
Self-employment covers a vast range of working styles, from sole traders to partnerships to limited company directors and LLP’s. Knowing what you are going to need to prove your income as well as what figures the lender will use to calculate affordability, is 95% of the battle.
Different lenders have different policies, so knowing what they need is the key to a successful (and less stressful) application.
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Questions we get asked about Self-Employed Mortgages
Can you get a mortgage with one years accounts?
Yes.
Can you borrow 95% of the purchase price if you are self-employed?
Also yes.
Can you have an interest only mortgage if you are self-employed?
And finally… yes.
What's needed for Self-Employed Mortgages?
Sole Trader or Partner (not LLP)
Lenders will want to see your last 2 or 3 years (but can be done on one-year accounts) SA302 or accountants tax calculation AND your Tax Year Overviews. They will then look at the net profit figure. This is the figure that was liable to income tax, including any tax-free allowance.
Remember that this figure is after your expenses have been accounted for.
Ltd Company Directors
Lenders will generally want to assess the full accounts for the business and may also ask for the SA302/Tax Calcs and TYO’s mentioned under the sole trader info. They require this to make sure that the business is profitable and sustainable.
Again, this will normally be for a 2 or 3 year period but it can be done with one years accounts.
LLP Partners
If you’re a partner in a large LLP, obtaining company accounts may be impractical. Some lenders accept a letter from a managing partner or finance director confirming remuneration. New partners may benefit, as certain lenders use this method to verify income based on previous profits and the share you would have received.
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