SELF EMPLOYED MORTGAGE
Avoid the confusion
SELF EMPLOYED MORTGAGE
Avoid the confusion
Being self-employed brings many rewards in life but not when it comes to buying a home, and the confusion surrounding self-employed mortgages effects thousands of applicants each year.
While there are a handful of additional obstacles to consider along the path to success, it is usually still possible to reach the dream destination of getting a mortgage. Here’s all you need to know.
Which Lenders Offer Self Employed Mortgages?
The good news is that most banks and mortgage lenders will allow self-employed workers to borrow money. This means that, despite the perceived lack of options, you should have no problems finding a lender – as long as you meet the criteria.
Remember, though, that all lenders have their unique policies. So, just because one bank doesn’t offer self-employed mortgages, it doesn’t mean you should give up.
What Additional Challenges Will I Face During The Self Employed Mortgage Application?
Lenders need to verify your earnings. This is very easy when applying for a mortgage under traditional employment but can be a little more difficult when you’re self-employed. Most lenders will want to see earnings reports for at least 2 years, and potentially up to 5 years.
Your tax accounts are the best way to prove earnings, but it’s important to keep financial records too. On a separate note, lenders will want to know that the earnings are set to continue, which is why contracts for future employment – as well as similar documents – can work wonders.
How Much Can I Borrow On A Self-Employed Mortgage?
As a rule of thumb, most lenders will lend up to a maximum 5 times your annual earnings – although many set their limits to 4 or 4.5 times the earnings.
The earnings are ordinarily calculated by taking the mean average from the last 2-3 years, as per the figures on your financial records. Meanwhile, those that are making joint applications with their spouse can add the earnings to their partner’s before adding the multiplier.
Should I Speak To A Mortgage Adviser About A Self Employed Mortgage?
Definitely speak to mortgage advisers. Even if you have a basic understanding of mortgage rates and know how to prove your earnings and steady work status, an expert can help you find the best rates from the best lenders while also supporting you through the preparation of the application.
Their word can extend to helping you compared fixed rate and standard variable rate deals, along with other key factors to ensure you gain the very best self-employed mortgage agreement. If nothing else, it should provide you with peace of mind
What Can I Do In The Meantime?
Collecting and collating your financial records is a great starting point while you should also use this opportunity to build a strong credit score and a larger deposit. Those two features will open up far greater opportunities regarding the interest rates and the likelihood of approval.
Moreover, it’s important to be clear about whether you’re a sole trader, partner, or owner of a limited company as this will impact the way lenders view your application.
These articles are for information only and no advice should be conferred from the content within. Please seek independent financial advice prior to taking any action.
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