IF YOU’RE self-employed or a small business owner, then getting a mortgage can be tricky.
The days of self-certification (when people could simply declare their income and lenders didn’t generally ask for proof) are well and truly over and there’s no doubt that self-employed homebuyers have suffered because of tighter controls imposed on loan approvals.
It means that freelancers, contractors and those with different income strands now have to jump through more hoops than ever before.
However, just because the process has been made more difficult, it doesn’t mean that it has become entirely impossible to secure a mortgage.
You’ll just have to keep to a few dos and don’ts, while also remaining realistic. So if you have recently set up a business, then it’s highly unlikely that a lender will be able to use the income from this when making a decision about affordability.
It’s all about making sure you have a guaranteed level of income and can make the repayments without any problems. One way to show this is by providing business accounts, usually signed off by an accountant.
Depending on which lender you use, this may be three years’ worth of business accounts, although some may accept two years of accounts. You may also have the option to use two or three years of tax returns if you aren’t able to provide business accounts, although this varies between lenders.
Make sure your books are up-to-date and organised. Offering out-of-date figures won’t be looked on favourably.
Just as if you were in full-time employment, having a deposit and a good credit history will certainly help a lender come to a decision.
Depending on how you have set up your business – as a sole trader, partnership or limited company – also has implications for the way your application is considered.
Speak to a mortgage broker before approaching individual lenders. Why? Because they look at the whole of the market and will be able to advise you about which lenders are happy to deal with self-employed workers and what criteria they will apply to assess you.
Here at Redrose estate agents in Chorley, we work with an independent mortgage broker who is able to discuss all your options if you are self-employed. Get in touch using our contact form and we’ll arrange a call back.