There are numerous ways you can obtain a mortgage when self-employed and depending on your situation there will be different lenders who can be approached.
What income are you looking to use for your mortgage application is an important question- however, what income the lender chooses to use is even more important as it may be not the set of figures you were hoping they would look at.
Let’s consider just some of the different scenarios where you will need one of our experienced mortgage brokers to assist you:
If you've recently changed from Sole trader to a Ltd company director getting a mortgage can be difficult as some lenders can "reset" the typicaly 2-3 years histroy and/or evidenced required.
However we have lenders who can ignore this recent change in some cases.
If you've recently gone self employed you may find it tricky to get a mortgage as lenders typically look for 2-3 years history.
However we have access to lenders who are happy with 1 years set of figures and/or happy to take a view on projector earnings provided by your accountant in some situations.
A recent change in earnings in the most recent year can be an issue as the lenders will want to understand the reason for the change and could decline for fear the business is not on a stable footing for the future.
We have access though to lenders who can look past a recent decline in profits where there is an understanding of why this has happened. I.e Covid-19 etc
Most lenders like to see the latest full completed set of accounts to consider a self employed applicant. Often this can be no convientant as your accounts are completed later in the tax year.
Thankfully though we have access to lenders who can consider your latest set of accounts typically up to 18 months old.
For all the right reasons you may pay yourself a small salary and take modest dividends to keep your tax bill in check. However when it comes to lending many lenders will only count the actualy income you've paid yourself.
We have access though to lenders who can take a more broader view on this vs just looking at actually drawings.
Often you will retain profits within the business to draw another day in the future or wanting to keep them for when you can draw them at a lower tax bracket.
We have access to lenders who can consider retained profits so you can keep the funds in the business but have them "counted" towards your mortgage income for your applications.
Taxable drawings from your business are often drawn at level to avoid incurring further tax or ending up in a higher tax band, which can mean profit it's ultimately 'drawn" from the business.
We work with many lenders who are happy to consider either net profit, gross profit or in some cases even profit before corporation tax. This can make a big difference in your earnings that are consider.
Sometime just a salary is drawn through the business with no further dividends taken.
This can be due to the business size or the number of other directors/shareholders.
This could be a situation where your "%" in the business is considered and therefore your access to that profit which could be used towards your income for your mortgage application.
Being self-employed carries with it many advantages like being able to pay yourself more tax efficiently potentially, choosing how much to pay yourself and also deciding to retain earnings to be paid in a completely different tax year.
However when it comes to the mortgage lenders very often “view” things differently from what you might think and often focus solely on your “taxable earnings” which for all the right reasons might be quite low.
For the reason, it's important and frankly beneficial to have a mortgage broker support you who has access to lenders who are more friendly to self-employed applicants and income.
It takes less than 30 seconds to complete
An overview of the self-employed mortgage application process:
Confirmation of what financial years accounts or figures are available currently.
Considering the different incomes that could be considered such as your taxable earnings or company profit.
Reviewing the different lenders to make sure you progress with the most suitable option that your broker advises.
If latest set of accounts can be brought foward to assist where needed then contacting your accountant to discuss options.
Your mortgage broker will then apply to the lender and work with them on the typically numerous questions they will have about your income and cirucmstance.
Our team of mortgage brokers are specialists in helping you navigate all of the different rates, fee’s and deals to make sure you end up with just the one mortgage that’s right for you. We also help manage the whole process for you so it’s nice and straightforward.
Often the lenders will make assumptions or even worse let the computer make the decision on whether to lend to you, this is where we step in to ensure you get the correct consideration for your application and we help present your application in the most suitable light; increasing your chances of acceptance on your first application.
Access to over +90 lenders so you will get the most suitable rates and terms available with many of these lenders not available on the high street which are exclusive to brokers.
Real relationships with the lenders so we can get your application pre-approved if your situation isn’t straightforward. Plus your mortgage broker is there answer all the questions you may have.
We’re quick, on our first call we will quickly establish your options and let you know the next steps so we can arrange everything promptly for you.
If you prefer to speak face to face we can also arrange a video call.