Finding a Self Employed Mortgage
Finding a mortgage when you’re self employed or freelance is never easy, luckily for you, MO’s got all the information you need to know. Read on and find out about self-employed mortgages.
The truth is, of course you can get a mortgage if you’re self employed or freelance. Great. Is it easy to do? Often, not as easy as if you were employed... But, luckily for you, we’re going to show you how getting a mortgage can be a reality, and not a dream, through our guide.
What is needed to get a self employed mortgage?
Mortgage applications of the past only required you to "self-certify" your income for a lender to give you the green light. However, since the credit crunch things aren’t quite as easy. Now, not only do you have to prove your income, but you must also show that your income can sustain your mortgage payments alongside your other outgoings.
The reason? Like with any mortgage application nowadays, you must prove how much you earn & pay tax on when you apply for a mortgage so that lenders can work out how much you can afford when making payments. Though this can make self-employed mortgages more difficult due to such proof only existing once each year when you submit your accounts, it's by no means an impossible task.
How to prove your income if you’re self employed
If you are self-employed then you are going to have to supply things called SA302's along with tax overviews. These are the outcome of the accounts submitted to HM Customs. The SA302's show what income you have declared along with your tax allowances, while the tax overviews show how much tax you still owe to HM Revenue & Customs. In the instance where your latest accounts aren't yet available, some lenders will allow an accountants reference but, this will limit your choice on who you can use.
While it will vary from lender to lender on how you prove your income, lenders prefer that you give them your tax year overviews and tax calculations from the last two to three years. While this might sound complicated, your yearly tax calculations can be found on the HMRC website where you can download them. Alternatively, your accountant will be able to supply these for you but may charge for the privilege.
What if I’m recently self employed?
What often happens here is that lenders look to see if you’ve had a history of employment in a similar line of business before switching. Also, it’s worth noting that some specialist lenders may be able to help those with just a single year’s accounts.
How you can overcome this:
If you’re not sure, getting help from a mortgage broker can be a simple of way of making life easier for yourself. Calculating your income and eligibility can vary massively between lenders. So, the best thing to do for borrowers will be to go with a lender who will understand their position and view whatever circumstance they find themselves in more favourably.
So, where does a mortgage broker step in? Getting advice from a mortgage broker or an independent financial advisor (IFA) can be a great option for helping point you in the right direction for which lender and which type of mortgage will suit you best. Though, if you’re strapped for cash this might be tricky as some brokers can charge up to £500 for their services, although this will largely depend on their seniority and experience.
However, if you are strapped for cash and are seeking immediate advice, then look no further. At Mortgages Online we can offer you 24/7, free, impartial advice that’ll help decode any other self-employed mortgage problems that you’re about to encounter. Our mortgage comparison service is free and easy to use – so credit cards away please!
MO can also offer you a life insurance quote on completion of your mortgage application. For more mortgage guides look in our Articles section.