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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Saving for a house deposit remains the single biggest hurdle facing first-time buyers in today’s property market. As a result, more parents and grandparents are searching for ways to step in and give the next generation a head start. The good news? If you’ve built up equity in your own home over the years, you may be able to support your child without having to drain your cash savings or liquidate investments. 4 Main Ways Families Can Help First-Time Buyers 1. A Cash Gift (Gifted Deposit) This is the most straightforward route. You provide funds directly to your child to put toward their deposit or purchasing costs. • What lenders require: A signed gifted deposit letter confirming that the money is an absolute gift with no expectation of repayment, along with proof of funds showing where the money originated. 2. Releasing Equity From Your Own Home If your capital is tied up in your property, a remortgage or a further advance allows you to unlock cash built up in your home equity. You can then use these released funds to fund your child's deposit without dipping into your emergency savings. 3. A Joint Borrower, Sole Proprietor (JBSP) Mortgage A JBSP mortgage allows you to add your income to the mortgage application to boost your child's overall borrowing power. • Key benefit: While you share responsibility for the monthly mortgage repayments, your child remains the sole owner on the property deeds. This avoids triggering additional Stamp Duty costs that usually apply when purchasing a second home. 4. Family-Assist or Springboard Mortgages If you prefer not to give money away permanently, a family-assist mortgage lets you place savings into a linked collateral account or secure a portion against your property equity. • How it works: Your savings act as security for your child’s loan for a set term (typically 3 to 5 years). Provided all mortgage payments are kept up to date, your money is returned to you at the end of the term. What Lenders Will Look For When submitting a mortgage application involving family help, lenders will carefully inspect the source of funds to satisfy UK anti-money laundering regulations: Gifted Deposit Letter Signed declaration stating the cash is a non-refundable gift. Proof of Funds Bank statements showing the accumulation or source of the capital. Overseas Documentation Extra verification and audit trails if funds originate from family abroad. How Bristol Mortgages Online Can Help Navigating family mortgages and equity release requires choosing the right structure for both your family's finances and your child's long-term independence. Whether you want to explore remortgaging your home to release funds or structure a Joint Borrower, Sole Proprietor arrangement, our specialist, Phil Clark, at Bristol Mortgages Online, guides you and your child through every step of the process. Ready to explore your options? How to Contact Us for Advice Phil Clark will personally deal with your enquiry Tel 0117 325 1511 Email info@swmortgages.com Complete a form via our website www.bristolmortgagesonline.com Please remember: YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE • #BristolMortgagesOnline • #BristolMortgages • #BristolMortgageBroker • #Remortgage • #RemortgageAdvice • #MortgageBroker • #helpfromparents • #equityrealease • # gettingonthepropertyladder
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