Self Employed

Applying for a mortgage when you’re self employed isn’t actually any different to applying for a mortgage as an employee. Your income is just evidenced in a different way depending on how you work – so whether you’re a sole trader, a partnership, a director of a limited company, or a contractor.

Have a read through and when you’re ready give us a call on 01225 719043 or use the ‘contact us’ page to get in touch and we’ll talk you through the finer detail.

 

I’VE ONLY JUST STARTED UP MY BUSINESS – CAN I GET A MORTGAGE?

You will need to provide at least one year’s full signed accounts before you will be considered for a mortgage. More than likely you will be asked for 2 year’s figures but there are a couple of lenders willing to consider just one year plus a projection from a qualified accountant.

 

I’M A DIRECTOR OF A LTD COMPANY – SO I’M EMPLOYED, RIGHT?

Generally, if you own less than 20-25% of the shares in the company, you will be treated as an employee and the lender will lend based on the figures on your payslip. If you own a higher level of shares then you will be treated a self employed and the lender will require 2 years evidence of salary and dividends or your share of the company’s net profit

 

WHAT INCOME WILL A LENDER USE WHEN ASSESSING MY APPLICATION?

Sole Trader: For a sole trader usually 2 years NET PROFIT figures will be required, although it can be possible to use 1 year + a projection by a qualified accountant.

Partnership: As per ‘Sole Trader’ but only your share of the profits will be taken into account.

Director of a Ltd Co: This is the one that causes most confusion. Lender’s will largely use 2 years Salary + Dividends, but some will use Salary + your share of the Net Profit (after corporation tax)

Contractor: There are various types of contractor. Some of them are often treated as ’employed’ so you may be able to use your payslips, but some others would require tax returns. We can advise on the best lender to use based on their lending criteria, to fit your circumstances.

 

WHAT DOCUMENTS WILL I NEED TO PROVIDE TO PROVE MY INCOME?

Lenders will generally accept the following:

Self assessment tax calculation form and tax year overview

Full signed company accounts prepared by a fully qualified accountant

An accountant’s reference (the lender will send their own reference directly to the accountant)

Contractors will usually need a copy of contract along with payslips

 

I BOUGHT MY HOUSE WITH A SELF CERT MORTGAGE – WILL I BE ABLE TO REMORTGAGE / MOVE?

If you’re unable to prove enough income to support the new mortgage (or the current balance if trying to remortgage) then you may be ‘locked in’ to your current property / mortgage deal. However, some lenders have special rules in place for existing customers moving house that may help. If you need help then we can often deal with this on your behalf, depending on your lender.

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