‘I can’t get a mortgage because I’m self employed’
‘I can’t get a mortgage I’ve only been self employed a year’
‘It’s harder to get a mortgage being self-employed’
Sound familiar? We hear these all the time… The good news is, none of the above are true, let me explain.
Getting a mortgage being self-employed is no different to being employed. The new mortgage lender will assess your circumstances and ability to repay the mortgage by assessing your annual income, your liabilities (loans/credit cards etc) and your past credit history.
You can’t have your cake and eat it…
The reason so many self employed people struggle to get a mortgage is because they don’t declare how much they are actually earning. Yet, they still expect to get a mortgage on how much they can afford to pay. As the saying goes, its not what you know, it’s what you can prove! Don’t shoot yourself in the foot to save a couple of hundred pounds on your tax bill, you’ll only regret it.
What income will mortgage lenders accept?
There are two main categories of self-employed applicants and both are treated differently for mortgage lending purposes.
Sole Traders:
The lender will only look at your Net Profits! This is the amount of money you are declaring as PROFIT, this is the amount of money left AFTER expenses of running your business.
LTD Company Directors:
If you own 25% or more shares in a company you will be treated as a self employed director with most mortgage lenders.
They will use your SALARY + DIVIDENDS and unlike a sole trader they will NOT look at profits.
If you’re sat thinking, well I make a lot of money but I don’t need it so I leave the money in my account. Don’t panic, we have access to some lenders who will consider your ‘retained profits’ in their income assessment.
Getting a mortgage with 1 years accounts:
If you are in the position where you have only been self employed for a year, then don’t panic there are a limited number of lenders on our panel who will consider a mortgage. As above you just need to make sure you are declaring what you are actually earning otherwise you are only harming your chances of getting a mortgage for the amount you actually need.
Speak to one of our mortgage brokers today for more information on any of the above and see how we can help you.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
AL Mortgage Solutions LTD is an Appointed Representative of PRIMIS Mortgage Network, a trading name of Advance Mortgage Funding Limited which is authorised and regulated by the Financial Conduct Authority. The Financial Conduct Authority does not regulate some forms of Buy to Let.
Our initial mortgage consultation is free. We will charge a fee between ยฃ0 and ยฃ500 that is payable on application of a mortgage. The amount we will charge is dependent on the amount of research and administration that is required. A typical fee for a purchase is ยฃ349.
Buy to Let Mortgages are not usually regulated by the Financial Conduct Authority.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage. You may have to pay and early repayment charge to your existing lender if you re-mortgage.
We are not qualified accountants and do not provide tax advice, you will need to speak to a suitably qualified accountant for any tax related matters.
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