We’re proud, and a little excited, to announce we are a finalists in the British Bank Awards 2018, which celebrate the most customer-centric financial services firms in the UK.
Flexible working hours and the desire to ‘be your own boss’ has bolstered the UK’s self-employment community to 4.77 million – nearly 15 percent of the workforce.
However, the self-employed, contractors and freelancers can often find it harder to get on the property ladder as getting a mortgage can be challenging. It doesn’t need to be. With the right amount of preparation and planning, obtaining a mortgage can be easier than you think.
Let’s start with step one: Getting your paperwork in order.
It may sound like we’re teaching you to suck eggs, but ensuring you keep up-to-date records and accounts is vitally important. The key difference for self-employed workers is that you will need to prove your income to any mortgage lender you apply to. Our top tip is to provide more information than you think necessary, for example:
- Two to three years’ accounts prepared by a chartered or certified accountant,
- The average of your last two years’ net profit or
- A track record of regular work.
Accounts should be up-to-date and in order before you apply – otherwise the application will be delayed or declined.
Step two: Understand your own figures
Knowing your numbers and being able to talk the lender through them is equally as important as providing the paperwork. If you have a dip in your income at a certain point, you will need to be able to clarify what happened and why. By pin-pointing and explaining any fluctuations, you will seem more credible to the lender and therefore, increase your chances of getting your mortgage application approved.
If you don’t have two years’ accounts, don’t panic. Some mortgage lenders will still consider your application, especially if you can prove a track record of regular work, you have left employment to work as a contractor in the same industry, or you have evidence of work lined up for the future.
Step three: Consider if remortgaging is right for you
If you already have a mortgage and want to re-mortgage to save money or move home, your existing lender may be able to help. If they have a history with you, they will be more likely to help than a lender who doesn’t know you.
Is it different for a Director of a limited company?
The same rules apply if you’re a Director of a limited company. Some mortgage lenders will consider retained profits when assessing an application. In some situations this can mean company directors find it more difficult to get a mortgage than their employees. Remember: Minimising your income too much for tax purposes – it could affect your chances of getting a mortgage.
The next step
Don’t assume it’s impossible to get a mortgage if you’re self-employed – it’s not. You just need a lender that understands the world of the self-employed.
If you are self-employed, a contractor or freelancer and would like to talk to us about a mortgage please contact us and arrange an appointment in a branch local to you or by telephone.
YOUR MORTGAGE IS SECURED ON YOUR HOME. THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGANST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPLAYMENTS ON YOUR MORTGAGE.