It’s a bit more difficult getting a mortgage if you are self-employed but achievable. If you are part of the UK self-employed Army and are looking to re-finance or purchase a home, this article will give you some help to getting a mortgage for your personal situation.
Over the last few years it has been getting increasingly harder to help Self-employed and contractors get a mortgage – This section of our important work force has been hit harder than any other.
Before the infamous credit crunch, which was in 2007, there was an option with many lenders to self-certify your income – Which meant they didn’t have to prove their income, there income amount only had to match the type of occupation there were in, which was very loose. Many lenders even offered Fast Track options which negated any checks at all – which allowed any previous credit problems or rent arrears.
Self-certification mortgages were originally designed for business owners who had lots of different income streams who found it difficult to put all their income together or their income fluctuated during different times of the year.
Unfortunately, self-certification or self cert mortgage were not sold correctly, and people were able to increase their actual income in order to get a higher mortgage or loan.
Self-cert mortgage and no checks mortgages or Fast tracks were then stopped completely, which is why it’s harder to get a mortgage if you’re a self-employed but not unachievable if you can prove your income.
Mortgages for the Self employed
The main change for the self -employed is they need to have proof of their income to show their potential bank or lender- The majority of lenders would like to see 2 years accounts but some will except 1 year or proof of income from HMRC- For more details please contact us at Total Home loans and our advisors will be able to discuss your circumstances in detail.
The information the majority of lenders ask for:
- Your last 2 years accounts
- A deposit to put towards the purchase ( If it’s a purchase of a property )
- Your credit file to show you have kept up with previous credit agreements
- You are buying or re-financing a suitable property for their guidelines
The bank or lending company will generally take an average of your last 2 years income to use as part of their calculation to work out how much they will lend you. Some lenders insist you have a suitably qualified accountant who has prepared your accounts- It’s important to look around for an accountant who is either Chartered or certified – When you are thinking about applying for finance it’s a good idea to make sure your accounts are up to date, as lenders will insist on seeing your latest accounts.
Many of our clients that we have helped in the past had very individual circumstances and we were able to help get them mortgages using other proof of income- Please contact us directly to discuss your individual circumstances.