I’m self-employed. Can I get a mortgage?
In short, yes! There are lenders that have products that are available for the self-employed market. At Yomo Finance we’ve worked with many self-employed homeowners and first time buyers to find them the best deal for their circumstances. Book an appointment with our team in Rochester today to discuss the products available.
Self-employed mortgages with one years’ accounts
They are not widely available, but it is certainly possible to get a mortgage with just one year of accounting history. Whilst most mortgage lenders will expect self-employed mortgage applicants to be able to show three years' worth of accounts, some specialist lenders will be able to help you. You should be aware that due to minimal lenders offering this type of mortgage, the interest rates on your mortgage are likely to be less competitive. As high street lenders won’t usually be able to consider your application, it’s best to speak to mortgage brokers, such as Yomo Finance, to find out which lenders are more accepting of your situation.
How do I prove my income with one years’ accounts?
For self-employed mortgage applicants, mortgage lenders will usually take an average of their earnings over a period of two to three years, to mitigate some of the risk, given that self-employed income is still considered less stable than that of employed people.
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Where you only have one year of accounts available, additional proof that your business will support your income in the longer-term is likely to be requested. Business plans and projected future income can usually back up your application, alongside business bank statements The self-employed business activities you perform will have an impact on how your income is used by the mortgage lender.
How you can prove your proof of income for your first year of business is as follows:
Sole traders/
freelancers
Your personal income will be used to calculate your mortgage and you will need to provide an SA302 form for the year and certified accounts (at least 12 months' worth, but the more the better).
Limited company directors
Your personal salary and dividends will be used, although rarely net profits are also considered. To prove this you will need your latest years finalised accounts, certified by a qualified accountant and an SA302 for the same period as well as business bank statements
Partnerships
To use your income derived from a partnership, you must own at least 25%. Your share of the net profits will be used in the mortgage calculation. To prove this, you will need an SA302 form for the year.
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What is the minimum deposit required for a first time buyer mortgage?Typically you need at least 5% of the property price.
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What government schemes are available to help first time buyers?Schemes like Help to Buy and shared ownership are available along with new schemes like First Home and Deposit Unlock.
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What are the different types of mortgages available for first time buyers?Fixed rate, variable rate and tracker mortgages are common options.
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How do I know how much I can afford to borrow?Lenders will assess your income, expenses, and credit history to determine your borrowing limit.
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What is the process of getting a mortgage as a first time buyer?Get a mortgage agreement in principle, find a property, complete a full application and await approval.
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What fees are involved in buying a house for the first time?Common fees include valuation, legal, and arrangement fees, plus stamp duty for properties over a certain value.
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How can I improve my chances of mortgage approval?Maintain a good credit score, save for a larger deposit and manage your debt.
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What is a mortgage in principle?It's an estimate from a lender of how much they might lend you, based on your financial situation and light credit checks.
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What is the difference between term life and whole life insurance?Term life covers a specific period; whole life covers your entire life.
