Self employed first time buyer

self employed first time buyer

Taking the First Step: A Guide for Self-Employed First-Time Buyers 

The dream of homeownership burns bright for many, and self-employed individuals are no exception. While navigating the mortgage market as a first-time buyer can feel daunting, it’s absolutely achievable. This comprehensive guide empowers self-employed first-timers to confidently embark on their property journey.

What is a First-Time Buyer (FTB) for Self-Employed?

A self-employed FTB is someone purchasing their first-ever property and relies on income generated from self-employment (sole trader, contractor, or director) as their primary source of income. This income may take different forms compared to a traditional salary, but it doesn’t disqualify you from becoming a homeowner.

Can You Be a First-Time Buyer if You’re Self-Employed?

Absolutely! Lenders recognise the valuable contribution of self-employed individuals to the economy. Several mortgage products cater specifically to self-employed FTBs, with some lenders even offering competitive rates.

How to Become a First-Time Buyer if You’re Self-Employed

Here’s a breakdown of the key steps to becoming a self-employed FTB:

Financial Preparation:

  • Get Your Finances in Order: Gather at least two years of your Self-Assessment tax returns (SA100 forms), recent SA302 tax calculations, and bank statements demonstrating consistent income and business expenses.
  • Build a Deposit: Saving a substantial deposit (ideally 10-20% of the property value) strengthens your application. Consider government schemes like Help to Buy ISA or Lifetime ISA (restrictions apply) for additional support.
  • Improve Your Credit Score: A good credit score (ideally above 720) demonstrates responsible financial management and increases your chances of securing a favourable mortgage deal.

Understanding the Mortgage Market:

  • Research Different Mortgage Types: Fixed-rate mortgages offer stability, while tracker mortgages track the Bank of England base rate. Explore options with a mortgage broker to find the best fit for your needs.
  • Know the Lingo: Familiarise yourself with terms like Loan-to-Value (LTV) ratio (percentage of the property value you borrow), affordability checks, and arrangement fees.
  • Government Schemes: Explore first-time buyer schemes like Help to Buy Equity Loan, which reduces your initial deposit requirement (conditions apply).

Seek Expert Guidance:

  • Mortgage Broker: An experienced mortgage broker can be your biggest asset. They understand the complexities of self-employed mortgages and can guide you towards lenders with the most favourable terms.
  • Solicitor: A solicitor ensures the legal aspects of your property purchase are handled smoothly.
first time buyer self employed

Is it Difficult to Get a First-Time Buyer Mortgage if Self-Employed?

While it may require more preparation compared to employed applicants, becoming a self-employed FTB is achievable. Here are some factors that can influence the difficulty:

Trading History: Lenders prefer a track record of consistent income stability. Ideally, you should be self-employed for at least two years with demonstrably stable earnings.

Profitability: Your net profit after business expenses plays a crucial role. Showing strong profitability strengthens your application.

Deposit Size: A larger deposit reduces the lender’s risk and improves your chances of securing a mortgage.

Mortgage Brokers Help Self-Employed First-Time Buyers

Mortgage brokers are invaluable resources for self-employed FTBs. Here’s how they can help:

home loans for new builds

Understanding Your Needs: They assess your financial situation, risk tolerance, and goals to recommend the most suitable mortgage products.

Smoothing the Application Process: Brokers help gather required documents and present your financial picture in the most favourable light to lenders.

Negotiating Power: They leverage their relationships with lenders to negotiate lower interest rates and potentially waive fees, saving you money.

Simplifying the Process: Brokers handle communication with lenders, freeing you from paperwork hassle and keeping you

Top 3 Tips for Self-Employed First-Time Buyers

1. Plan and Be Prepared: Start saving your deposit and improving your credit score well in advance. Gather all necessary documents to streamline the application process.

 2. Show Consistent Income: Present your tax returns in a way that demonstrates consistent and stable income over a minimum period (usually two years). Highlight future growth potential if applicable. 

3. Work with a Mortgage Broker: Their expertise navigates the complexities of self-employed mortgages, saving you time, money, and ensuring you secure the best possible deal.

Making Your Self Employed First Time Buyer Mortgage Journey Smooth

Mortgages for the self-employed: https://www.unbiased.co.uk/discover/mortgages-property/buying-a-home/self-employed-mortgages

Complete your details below and we’ll be in touch to help you with your enquiry

Contact Us