\u2018Self-employed mortgages\u2019 no longer exist, so it\u2019s a myth that you can get one. In theory, you can access exactly the same mortgage products as buyers on a company payroll – you\u2019ll just have to jump through a few more hoops to convince your lender that you can keep up with repayments.
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Before they were abandoned, there were specific mortgage plans for self-employed buyers. They were designed for people with their own businesses, as well as contractors and freelancers. Self-certified (or \u2018self-cert\u2019) mortgages were aimed at people in these groups, allowing them to apply for a mortgage without proof of income.
<\/p>\n\n\n\n
But after being mis-sold during the 90s (and, of course, in the run-up to the credit crunch), these so-dubbed \u2018liar loans\u2019 were abolished by the FCA in 2014. Banks now face much more strict regulations when lending money, and it\u2019s become harder for the self-employed to secure a mortgage – good news for market stability, but potentially bad news for you.
<\/p>\n\n\n\n
That\u2019s why you have to be ready to do your homework, cover a lot of ground, and put more effort into getting a signature on the dotted line – but, with a bit of know-how, it should still be straightforward.
<\/p>\n\n\n\n
How to get a mortgage when you\u2019re self-employed<\/strong><\/h3>\n\n\n\nJust like someone on a standard payroll, you will need to prove your income to the lender and show beyond any doubt that you\u2019ll be able to keep up with repayments. Here\u2019s what they\u2019re likely to ask for:
<\/p>\n\n\n\n
- At least two years\u2019 worth of accounts<\/li>
- An accountant (chartered or certified)<\/li>
- A track record of regular work<\/li>
- A healthy deposit on the property<\/li>
- A good credit history (for both you as an individual, and your business)<\/li><\/ul>\n\n\n\n
This is a general guide, so exactly what documentation and evidence you\u2019ll need depends on how your business is set up, how long you\u2019ve been self-employed, and what your business\u2019s books look like.
<\/p>\n\n\n\n
What is an SA302?<\/strong> <\/h4>\n\n\n\nThe SA302 is the most commonly-requested document by mortgage lenders, and it shows your tax breakdown based on your last self-assessment tax return. Lenders are likely to ask for two or three years\u2019 worth of these to show clear evidence of sustained income. You can download this from your accounting software or from your HMRC account. Make sure the lender accepts forms you\u2019ve printed yourself beforehand – otherwise you may need to request a covering letter from HMRC too.<\/p>\n\n\n\n
Accounts and proof of income<\/strong>
<\/h4>\n\n\n\nThe other information requested varies from lender to lender and depends on the structure of your business (more on that below). Most mortgage lenders will ask for at least two years\u2019 worth of well-kept accounts. Three is ideal, two is acceptable, and you may struggle if you only have one.
<\/p>\n\n\n\n
Make sure your accounts are immaculate, up-to-date, and clear – remember, lenders want to be confident that you\u2019re financially trustworthy, so demonstrate it through your diligence here. Needless to say, you\u2019ll also need bank statements, profit and loss reports, and balance sheets as well.
<\/p>\n\n\n\n
Alongside your business accounts, lenders will also want to see evidence of regular work and future work in the pipeline too. Show you have trusting clients who rely on you year after year for repeat business, and prove you have more work coming up that will ensure you maintain a healthy profit – enough to pay your mortgage bills with ease.
<\/p>\n\n\n\n
They\u2019ll also want to look into your personal finances and outgoings, so make sure these are in good shape too – and if you\u2019re thinking of making a big purchase, like a car, consider holding off for a bit.<\/p>\n\n\n\n
Different types of business structure<\/strong>
<\/h4>\n\n\n\nBear in mind that the way your business is set up will affect what information you\u2019ll need to provide.
If you\u2019re a sole trader, it\u2019s pretty straightforward – you and your company are essentially the same financial entity, so your profits are considered one and the same.
<\/p>\n\n\n\n
If you\u2019re in partnership with someone else, lenders will look at each partner\u2019s share of the business profits – so make sure your accounts reflect exactly how much you receive.
<\/p>\n\n\n\n
It\u2019s a bit more complicated with limited companies, as your business is separate from your personal affairs. If you\u2019re the director and pay yourself a basic salary plus dividends, make sure your total income is clear to the lender. Some will also accept \u2018retained profits\u2019 (those kept in your business) as part of their affordability calculations, so check before applying.
<\/p>\n\n\n
\n \n \n
<\/p>\n\n\n\n
This is a general guide, so exactly what documentation and evidence you\u2019ll need depends on how your business is set up, how long you\u2019ve been self-employed, and what your business\u2019s books look like.
<\/p>\n\n\n\n
What is an SA302?<\/strong> <\/h4>\n\n\n\nThe SA302 is the most commonly-requested document by mortgage lenders, and it shows your tax breakdown based on your last self-assessment tax return. Lenders are likely to ask for two or three years\u2019 worth of these to show clear evidence of sustained income. You can download this from your accounting software or from your HMRC account. Make sure the lender accepts forms you\u2019ve printed yourself beforehand – otherwise you may need to request a covering letter from HMRC too.<\/p>\n\n\n\n
Accounts and proof of income<\/strong>
<\/h4>\n\n\n\nThe other information requested varies from lender to lender and depends on the structure of your business (more on that below). Most mortgage lenders will ask for at least two years\u2019 worth of well-kept accounts. Three is ideal, two is acceptable, and you may struggle if you only have one.
<\/p>\n\n\n\n
Make sure your accounts are immaculate, up-to-date, and clear – remember, lenders want to be confident that you\u2019re financially trustworthy, so demonstrate it through your diligence here. Needless to say, you\u2019ll also need bank statements, profit and loss reports, and balance sheets as well.
<\/p>\n\n\n\n
Alongside your business accounts, lenders will also want to see evidence of regular work and future work in the pipeline too. Show you have trusting clients who rely on you year after year for repeat business, and prove you have more work coming up that will ensure you maintain a healthy profit – enough to pay your mortgage bills with ease.
<\/p>\n\n\n\n
They\u2019ll also want to look into your personal finances and outgoings, so make sure these are in good shape too – and if you\u2019re thinking of making a big purchase, like a car, consider holding off for a bit.<\/p>\n\n\n\n
Different types of business structure<\/strong>
<\/h4>\n\n\n\nBear in mind that the way your business is set up will affect what information you\u2019ll need to provide.
If you\u2019re a sole trader, it\u2019s pretty straightforward – you and your company are essentially the same financial entity, so your profits are considered one and the same.
<\/p>\n\n\n\n
If you\u2019re in partnership with someone else, lenders will look at each partner\u2019s share of the business profits – so make sure your accounts reflect exactly how much you receive.
<\/p>\n\n\n\n
It\u2019s a bit more complicated with limited companies, as your business is separate from your personal affairs. If you\u2019re the director and pay yourself a basic salary plus dividends, make sure your total income is clear to the lender. Some will also accept \u2018retained profits\u2019 (those kept in your business) as part of their affordability calculations, so check before applying.
<\/p>\n\n\n
\n \n \n
<\/h4>\n\n\n\n
The other information requested varies from lender to lender and depends on the structure of your business (more on that below). Most mortgage lenders will ask for at least two years\u2019 worth of well-kept accounts. Three is ideal, two is acceptable, and you may struggle if you only have one.
<\/p>\n\n\n\n
Make sure your accounts are immaculate, up-to-date, and clear – remember, lenders want to be confident that you\u2019re financially trustworthy, so demonstrate it through your diligence here. Needless to say, you\u2019ll also need bank statements, profit and loss reports, and balance sheets as well.
<\/p>\n\n\n\n
Alongside your business accounts, lenders will also want to see evidence of regular work and future work in the pipeline too. Show you have trusting clients who rely on you year after year for repeat business, and prove you have more work coming up that will ensure you maintain a healthy profit – enough to pay your mortgage bills with ease.
<\/p>\n\n\n\n
They\u2019ll also want to look into your personal finances and outgoings, so make sure these are in good shape too – and if you\u2019re thinking of making a big purchase, like a car, consider holding off for a bit.<\/p>\n\n\n\n
Different types of business structure<\/strong>
<\/h4>\n\n\n\nBear in mind that the way your business is set up will affect what information you\u2019ll need to provide.
If you\u2019re a sole trader, it\u2019s pretty straightforward – you and your company are essentially the same financial entity, so your profits are considered one and the same.
<\/p>\n\n\n\n
If you\u2019re in partnership with someone else, lenders will look at each partner\u2019s share of the business profits – so make sure your accounts reflect exactly how much you receive.
<\/p>\n\n\n\n
It\u2019s a bit more complicated with limited companies, as your business is separate from your personal affairs. If you\u2019re the director and pay yourself a basic salary plus dividends, make sure your total income is clear to the lender. Some will also accept \u2018retained profits\u2019 (those kept in your business) as part of their affordability calculations, so check before applying.
<\/p>\n\n\n
\n \n \n
If you\u2019re a sole trader, it\u2019s pretty straightforward – you and your company are essentially the same financial entity, so your profits are considered one and the same.
<\/p>\n\n\n\n
<\/p>\n\n\n\n
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