Being self-employed can be a highly rewarding experience, with the freedom to control your own working life. We can help bring that freedom to the mortgage process.
You can get a mortgage if you have only been self-employed for one year but it may be a challenge. Many lenders will ask for three year’s worth of accounts to prove your income when applying for a mortgage. However, some lenders will be willing to accept you as a borrower with only 1 year of accounts too.
You should seek the help of a mortgage advisor who has access to mortgage lenders who will be willing to accept you onto a mortgage.
Make sure that your credit score rating is good and that you have kept up with your monthly outgoings. If you miss your monthly payments now, lenders will think you may miss repayments on your mortgage and you will be deemed high-risk.
Check into your own credit history and make sure that you have closed any unused credit cards. Pay off any debts that you owe and make sure that you stay out of your overdraft. You can check your credit score for free on sites such as Experian.
It is harder to get a mortgage if you are self-employed due to the complexity of proving your income. If you are a contractor on a fixed term contract under the PAYE system then it is much easier to look into your income as an employed borrower. You are considered a high-risk borrower if you cannot provide at least three years of documentation.
The lenders in the mortgage market are becoming more flexible towards the self-employed but the longer you have been trading the better.
Lenders will look into your accounts and your self-assessment SA302 forms for evidence of your income and that you have been paying tax. Some lenders will require you to have a qualified accountant to provide this documentation.
If you are self-employed you will need to bring any contracts or agreements that you have alongside your accounts. If you are a sole trader or a part of a partnership your income will be based on your annual accounts or your share of the net profit.
There is something called an income projection that you can ask the lender to consider, this is good if you have contracts planned or accounts drawn up that are not yet finished. An income projection will give an estimate into the amount that you are going to make in the next however many years.
You should use a professional accountant for this to provide to a lender. If you can provide an income projection you may be able to access better deals from the lender.
A mortgage broker will be of excellent use to you if you have only been trading for one year as they will be able to find you options. Mortgage brokers have access to the whole of the mortgage market and know where the specialist lenders are hidden away.
Mortgage brokers can help you gather your documents and tell you what you will need alongside your mortgage application. They are authorised and regulated by the financial conduct authority so can help with all the legal side of things too.
A mortgage broker will tell you straight away if they will be able to help you or not and pride themselves on being efficient and tailored for you. General enquiries will not incur a fee so you should get in touch with a mortgage broker today to ask any questions you may have about mortgages.