Self Employed Mortgage Q&A with Blestium

Can I get a mortgage if I’m self employed?

Yes, you can still get a mortgage if you are self-employed, but there may be more information you will need to provide. Here is what you need to know about getting a mortgage and being self-employed 

What counts as self-employed? 

You will be classed as self-employed if you own around 25 percent of a business, a limited company or if you are a sole trader or in a partnership. 

Is it difficult to get a mortgage if you’re self-employed? 

It can sometimes be more difficult to get a self-employed mortgage than it may have been before the recession, but this is the case with mortgages generally. 

You now need to get your income verified by an accountant or HMRC when you apply for a mortgage, because all lenders will want to assess your ability to repay. 

Can you still get a self-certification mortgage? 

No, the Financial Conduct Authority (FCA) banned self-certification mortgages in 2011. This stopped people applying for mortgages where they did not have to prove their income. 

Who can get a self-employed mortgage? 

Most lenders are happy to give mortgages to self-employed people if: 

• You have been trading for at least three years. 

• You have two years of accounts or self-assessment tax returns available. There are a few mortgage lenders that will consider an application with one years accounts if accompanied with a healthy income projection for the upcoming year. 

Some stricter lenders may want to see a prediction of your future clients or contracts, to make sure you can afford your mortgage repayments. 

Speaking to Blestium Financial Services can help you find the right deal, and meet the requirements for a successful application. 

How is a self-employed mortgage calculated? 

The amount you can borrow and the way it’s calculated depends on the lender, which is why it is important to shop around for the best deal.

Some lenders set the amount you can borrow based on your previous few years’ income, whereas others calculate it based on only your previous year of trading. 

They will also calculate your mortgage offer differently, depending on your legal status: 

For sole traders and partnerships, lenders take net profits as income. 

For limited companies, the lenders look at salary and dividends. In some cases, they look at salary and net profit of the company. 

The problem lenders face when deciding how much to lend to you often lies in the difficulty of establishing your regular income. For example, you might have quiet months or years, or periods when your business does better. This could distort the amount of money that a lender would offer you. 

How to improve your chances of getting accepted.

The length of time you have been trading is incredibly important, so time your application accordingly. 

Make sure your accounts are up to date, perhaps by using an accountant. You should also know your net profit before tax. 

You can do a self-assessment, by filling out a SA302 form in order to prove your income. If you have been trading for a while, it’s likely that you will already have completed a self-assessment tax return. 

Can you get the same offers as people who are employed? 

Yes, there is no reason why being self-employed should limit the mortgage deals available to you. Most lenders do not discriminate on this basis. 

Like employed buyers, you can help your chances of getting accepted for a mortgage by having: 

• A healthy deposit 

• A good credit rating 

• The ability to cover your mortgage repayments 

Look at all your options, and make sure you have the evidence you need to prove that you are able to repay the loan. 

Blestium Financial Services will not charge for any advice or brokerage fees. We have offices in Monmouth town centre and are happy to do home visits in the evening or on weekends. 

Contact Martin Newell on 01600 775393 or 07525616987 or email blestium@live.co.uk.