Newly Self-Employed

What are the options?

In theory, self-employed borrowers have access to the same range of mortgage products as everyone else. The key is being able to prove you have the income necessary to make the repayments on the loan for which you are applying.

What paperwork will I need?

Typically, you will need to provide a mortgage lender the following paperwork:

• Usually two years’ worth of company accounts or
• Two years tax calculations (SA302s) and Tax Overviews (downloaded from HMRC online1 or ordered by phone from HMRC)
• Some lenders might be able to use just one year’s accounts or tax calculations so it is worth getting ahead of the curve and speaking with an Adviser.

These documents show to lenders your levels of net income and tax payments. If you don’t have two years’ of records you may still be able to get a mortgage – there are a limited number of lenders that will consider using one years accounts or Tax Calculations/Overviews or / and will accept an Accountants Certificate verifying your income information.

If you are self employed as a Contractor you may also have to provide evidence of the work you have lined up for the future to show that your current levels of income will be maintained.

Also, if you already have a home loan and wish to remortgage, to move home or simply get a better deal, your existing lender may be more sympathetic, especially if you have a good history of making repayments on time.

Which mortgage will I get?

There are a handful of specialist lenders who offer products designed specifically with the self-employed in mind, however, most mainstream mortgage lenders routinely lend to the self-employed and you may not need to use a specialist. You should have full access to the choice between fixed and variable rate mortgages including tracker mortgages, so there’s no reason to worry that your choices will be limited. Your mortgage adviser’s feedback will be crucial since some lenders feel more comfortable about self-employed borrowers than others.

Helpful tips for the self-employed

There are certain traps that self-employed mortgage borrowers need to watch. For example, your accountant will see it as part of his job to minimise your tax bill using legitimate methods to reduce your taxable income – but this could count against you when applying for a mortgage as your net income will be shown to be lower.

Given the challenges the self-employed face when applying for a mortgage speak to your Prospect Adviser as soon as possible as they will provide impartial expert advice on getting the best possible mortgage deal for your individual circumstances.