Can I get a mortgage if I’m self-employed?
It may be challenging to get a mortgage if you are self-employed since you need to give evidence about your reliable income. However, to get a mortgage when you are self-employed is also not impossible. There are various ways to ensure your lender has a reliable source of income.
What are self-certification mortgages, and do they still exist?
Self-certification mortgages were specifically made for all self-employed individuals, which helps to self-certify and justify how much they earn annually without giving any evidence or proof. However, in 2014 the self-cert mortgages were completely banned since mortgages were accepted by concerned borrowers who ultimately couldn’t afford them. Therefore, now all these self-employed people must apply for a mortgage in the same manner as others.
Who are considered self-employed?
You’ll be viewed as self-employed by the lenders when you own more than 20-25% of the business, which is your main source of income.
How do you get a self-employed mortgage?
A self-employed person looking for a mortgage must pass all affordability tests by the leader in the same way as other borrowers do. However, since no employee can certify your income or wage, you alone have to give proof of your income. Mortgage providers have set strict rules in their lending criteria after implementing Mortgage Market Review in the year 2014. They’ve to be completely convinced about your mortgage affordability before they lend any money.
What will I need to provide for a self-employed mortgage?
Self-employed people must provide the following evidence to prove their income –
- Certified accounts of two or more years
- If you are a contractor, then you need proof of upcoming contract
- Taxpayer overview from HMRC or SA302 forms of past 2-3 years
- If you’re a director in company, then you need proof of dividend payments
- Passport
- Six months’ worth of bank statement
- Passport. Driving license
- Utility bills dated within 3months
All self-employed applicants must show accounts that a chartered accountant has prepared. Lenders prefer to check the average profits they’ve earned over the past few years. It will be challenging to convince lenders about your affordability to repay the mortgage if you have accounts of only 1 year. It will be helpful to provide evidence of your future commission and regular work. Good credit history and a healthy deposit help secure your mortgage for a self-employed individual.