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How do I get a mortgage if I’m self-employed?

By Lisa NichollsCeMAP

Last Reviewed: 21st March 2019

The number of people in self employment has risen sharply in recent years. As the number of self-employed borrowers has grown, so has the difficulty in getting a mortgage offer.

We’re not going to lie to you, there are a few hoops to jump through if you want to get onto the property ladder. It’s important to get all of your ducks in a row before you begin looking for the right mortgage. But don’t worry, all the planning will pay off.

 

What counts as being self-employed?

Lenders may class you as self-employed if you own around 25% of a business or more.

If you are in a partnership or are a sole trader, your lender will view you as being self-employed.

 

If I’m self-employed, can I definitely get a mortgage?

Yes, but you’ll need to meet the following criteria first.

Typically you will need to have at least two years’ worth of accounts or self-assessment tax returns available to show to your lender. In some cases, you might need to provide up to three years’ worth.

You may find that some lenders are stricter than others, too. Some might want to see a projection of your future earnings in the form of upcoming contracts, while others will be happy with just one year’s worth of accounts.

As a general rule, lenders are simply looking for evidence of reliable earnings and regular records of your income. Crucially, they need to be confident that you can sustain your current level of income in the years to come.

Self Employed Ducks in Row Mortgageable

What can I do to win over mortgage lenders if I’m self-employed?

There are plenty of things that you can do to make yourself look more attractive to lenders. Here’s what we’d suggest if you’re planning to make that first step onto the property ladder.

  • Employ a chartered or certified accountant. Most lenders will insist that your accounts are prepared by an accountant. There is also the added bonus that you won’t have to do your own accounts anymore!
  • Avoid spending on “red flags”. Things like online gambling websites and payday loan companies are big red flags for most lenders. Steer clear of these.
  • Enlist the help of a mortgage broker. This is one of the best things you can do when you are self-employed and looking for a mortgage. A broker will be able to point you in the direction of the lenders that are most likely to give you a good rate, saving you a lot of time and money.

 

I’m ready to apply for a mortgage. What should I do next?

Now that you fit all of the criteria above, it’s time to start looking for a mortgage.

If you’re self-employed and ready to buy your first home, you probably have a tonne of questions. Get in touch and we can walk you through the process, helping to find the right lender for you. Alternatively, complete our simple application form here and we’ll be in touch.

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