Looking for a Self-Employed Mortgage? Part 2
Caz Blake-Symes • February 24, 2020
Let Bristol & Bath Mortgages Online help you get a mortgage
What will I need to provide for a self-employed mortgage?
To prove your income when you apply for a self-employed mortgage, you will need to provide. Most banks and lenders will want to see a minimum of 2 or more years’ proof of income.
However, subject to meeting the lender’s criteria, we can offer mortgages to those with only 1 year’s proof of income.
Other specific evidence will be:
- SA302 forms and a tax year overview (from HMRC) for the past two or three years
- Evidence of upcoming contracts (if you’re a contractor)
- Evidence of dividend payments or retained profits (if you’re a company director)
Some lenders also prefer self-employed mortgage applicants to provide accounts that have been prepared by a qualified, chartered accountant; that way they can be sure of your reliability. It’s likely that they will focus on the average profit you’ve earned over the past few years.
If you only have accounts for one year or even less, you may find it a challenge to convince a lender that you can afford to repay a mortgage – but, again, it’s not impossible, our expert team will help you from the very start.
Having evidence that you’ve got regular work or providing proof of future commissions may help. Just be aware your choice of mortgages may be more limited.
Having a healthy deposit and a good credit history will also help your chances of securing a mortgage when you’re self-employed.
As well as providing evidence of your income, you will also need to provide:
- Passport
- Driving licence
- Council tax bill
- Utility bills dated within three months
- Six months’ worth of bank statements
Lenders will want to examine your bank statements to look at how much you spend on bills and other costs to be certain you could afford your mortgage repayments. They may ask about:
- Household bills
- Travel and commuting costs
- Childcare
- Holidays
- Socialising
- Hobbies
- Credit card and store card repayments
- Loan repayments
- Car finance agreements
- Catalogue credit accounts
What are self-certification mortgages, and do they still exist?
“Self-certification” or “self-cert” mortgages were specifically designed for the self-employed and allowed them to self-certify how much they earnt in a given year, with no need to provide evidence. However, self-cert mortgages were banned completely in 2014 due to concerns borrowers were being accepted for mortgages they couldn’t afford. This means those who are self-employed now need to apply for a mortgage in the same way as everyone else.
Do self-employed people have to pay higher mortgage rates?
Self-employed mortgages aren’t necessarily more expensive. As long as you’re able to supply enough information about your income, you should qualify for the same mortgage deal as someone with a comparable salary in a permanent, full-time job. The mortgage rate you get is much more likely to depend on the size of your deposit, as well as your credit rating.
The more can put down as a deposit, and the higher your credit rating, the better your mortgage rate is likely to be.
As a fully independent broker we will search the whole of the market for you including many specialist lenders, to ensure we can offer the most competitive and suitable deal and rate.
Bristol Mortgages Online www.bristolmortgagesonline.com
Tel 0117 325 1511
Bath Mortgages Online www.bathmortgagesonline.com
Tel 01225 584 888
Exeter Mortgages Online www.exetermortgagesonline.com
Tel 01392 690 888
Email info@swmortgages.com
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