If the option is available to you, it’s well worth considering a joint mortgage. With a joint loan you could borrow more and have better legal rights. It’s also a good way to improve your mortgage options if you are Self-Employed.
Thousands of Self-Employed people take out joint mortgages each year. The key is to find the right lender to match your circumstances.
It can sometimes be a little more complex for a Self-Employed person to get a mortgage, as their salary can be more variable compared with a typical employee. In addition, Self-Employed people don’t benefit from sick pay. This can make some lenders see you as a riskier prospect.
Self-Employed people may often have more success in obtaining a joint mortgage with someone in a salaried job than if they applied on their own.
A big advantage with a joint mortgage is that the lender combines your incomes to work out how much to lend you. A joint mortgage therefore means you can usually buy a more expensive home.
It is common for lenders to offer around four and a half times your combined income as the mortgage total. Use a mortgage calculator to calculate the likely repayments on your mortgage and make sure they are affordable.
Mortgage lenders assess your income based on your salary. If you’re Self-Employed they might use the income stated on your self assessment tax return or in your company accounts.
When you’re applying for a joint mortgage there are various documents that the lender might ask for.
Both applicants will need to provide proof of identity – a UK photocard driving licence or passport, plus proof of address from a recent utility bill. You may also need recent bank statements.
An employed applicant will need to supply payslips to prove their income, usually dating back six months. A Self-Employed applicant will confirm their income via one of the following:
Sole traders and partnerships: Up to three years’ tax calculations. These might be printouts from the HMRC website, SA302 (self assessment forms) or a summary produced by your accountant.
Limited Company: Finalised accounts for the last one to three years, the most recent filed in the past 18 months. Each year of accounts should state your salary. If not, you might need to supply P60 forms or SA302 self assessment forms.
The documents you need will depend on your lender. They will also check your credit history. If either applicant has a bad credit rating, it’s a good idea to seek advice. If it’s a particularly low credit score, due to CCJs or bankruptcy, for example, it might be better to look for a single rather than joint mortgage.
You can apply for a mortgage as an individual or jointly with up to three other people to buy a home. They don’t have to be family members, although many joint mortgages are taken out by couples or relatives.
The people that ‘own’ the home aren’t necessarily those on the mortgage – these details are part of the legal work done when you buy a property. It will help confirm how you share the equity you gain as you pay off the mortgage.
In England and Wales, two or more people can jointly own a property as joint tenants or as tenants in common. Deciding how best to approach this is an important step of the property purchase, and you should seek both legal and mortgage advice.
Momentum is here to help you at every step of your home buying journey. We know the market and which lenders will approve a joint mortgage when one person is Self-Employed.
We will spend time getting to know you and your property goals, so that we can compare the most competitive loans, interest rates and products for you.
We’re registered in England and authorised and regulated by the Financial Conduct Authority, giving you information that constitutes financial advice, and making sure that you understand the pros and cons of your chosen mortgage product. Contact our registered office in Sevenoaks today and we’ll be pleased to explain how we can make your house purchase faster and simpler.