Your Guide: Self Employed Clients

With complex income streams and different ways of proving this to lenders, self-employed clients can find it difficult to get mortgages approved by lenders. Create have created this helpful guide to support your purchase. 

 

If you’re unsure what you’re looking for, talk to one of our specialists.

Feel free to contact us and chat through your requirements.

Speak to an expert about your circumstances and lending needs.

Which lenders cater for the self employed?

It’s important to remember that every lender is different, which can make finding the right mortgage very complex.

When it comes to self employed applicants, certain lenders request 3 or more full years of accounts to prove income, where some lenders are able to offer a mortgage with just one years set of accounts. Some lenders consider businesses that have had a decline in profits in recent years, whereas some do not.

Lender criteria changes all the time, as every lender alters their stance on what is and is not acceptable – for this reason it would be inappropriate to list lenders as it could very soon be outdated.

So, if you’re self employed and looking to get a mortgage, the right advice would be to find a specialist broker like Create, that knows when and where the most appropriate deals are to be had, and which lenders would consider an application before you even start.

I’ve been declined by my bank, can I still get a mortgage?

On mortgages for self employed applicants it’s important to remember that every lender does things differently, and each occupies a different corner of the market, so it’s important not to give up if you’ve been declined with one lender.

Different lenders still have differing criteria, some will lend on concrete properties, and some won’t. Some will let you get a buy to let mortgage as a first time buyer, some wont. Similarly, some will lend to the self employed, some won’t.

The truth is, getting a mortgage is much harder than it used to be across the board, not just for self employed applicants. FCA regulation has really tightened up, so lenders had to pick and chose who they give their money to.

Just because you have been turned down by your own bank, doesn’t necessarily mean you can’t qualify for a mortgage anywhere.

 

Specialist mortgage broker services that have whole of market access will be able to put you in front of lenders with a more flexible attitude – and there are a few reputable organisations out there that you won’t see on the high street that you can only access through a broker.

Help to buy for self-employed applicants

Self-employed Help to Buy scheme mortgages are harder to come by if you only have 1 or 2 years accounts or trading history, but they do exist.

Those that have been self-employed for over 3 years with accounts or tax returns as evidence, will generally find things easier.

If you don’t yet have 1 years accounts then it’s not possible to get residential mortgages these days, but if you’re close to finishing your first tax year then the advisors can work with your accountant to establish the declared minimum income required for the borrowing you need.

 

Are there mortgages for self-employed borrowers with adverse credit?

Yes! There are mortgages for those who fall into both the self employed and adverse credit categories, but your choice of lenders will be fewer because you belong to two niches.

If you belong to two niche categories (in this case adverse credit and self employed), it’s especially important to seek specialist advice from a broker with access to the entire market to make sure you end up with the most appropriate deal.

If you make an enquiry, we can connect you with the lender best positioned to offer favourable rates to a customer who is self employed and has adverse credit.

Whatever your background or circumstances, Create the financial future you deserve.

Feel free to contact us and chat through your requirements.

Speak to an expert about your circumstances and lending needs.

Self Employed Mortgages without Proof of Income

Self-cert mortgages no longer exist in their traditional form so getting finance for self employed customers can be tough.

However, if you are looking to borrow additional money from your home then certain lenders do offer a secured loan without proof of income in many cases.

The FCA has imposed regulation to put the responsibility of lending on the organisation rather than the individual.

 

Therefore, lender’s have an obligation to ‘lend responsibly’, requiring them to ensure that the borrower is in a position now and in the future to meet your mortgage and other household commitments.

To do this they have to show they verified the income and the entire application sufficiently. The historical self cert mortgages sidestepped this entirely, which is one of the main reasons they no longer exist for loans regulated by the FCA.

So, how do I prove my income now?

If you need a mortgage self employed, the main way a lender will verify your income is through:

  • Payslips

  • p60’s

  • employer references

  • Benefit / Pension statements

  • SA302 tax returns

  • Self-employed accounts

Most of the main lenders you’ll know about will require up to 3 years accounts and sometimes more.

BUT if you’ve only been trading a year, don’t worry. There are mortgage lenders that will lend to you with 1 year in the right circumstances.

I have a complex situation, what can I do?

Mortgages for self employed people are often more complex than for employed applicants, and careful advice is required.

 

Create may be able to get in touch with underwriters/business development managers (decision makers) who look at things on a case by case basis.

Lenders can then consider accountants references, those paid in cash, and a range of other income evidence that may differ from what your main high street bank would ask.

 

Tell us about your situation and see how our advisors can help.

So what income can I use?

The income lenders usually accept is: 

EMPLOYED – gross basic income – bonus – overtime – commission – car / town / shift allowances – mortgage subsidy – other cash employer benefits 

SOLE TRADER – Net profit (if using accounts) – Total income received (if using SA302’s) 

PARTNERSHIP – Your share of net profit (if using accounts) – Your share of total income received (if using SA302’s) 

LTD COMPANY – Your share of directors salary – Your share of dividends – Occasionally lenders can consider net profit if there has been a large business expense or a sum earned but left in the business and not withdrawn.

Most lenders will require at least 3 years accounts; however here are some lenders that accept 2 or even 1 year’s accounts.

 

The important thing to note here is that if you’re having trouble finding a lender to accept your unique situation don’t give up.

 

Give us a call, leave a message on the live chat, or make an enquiry and see how one of the self-employed specialists we work with can help.

Ways to prove income

Standard evidence: – SA302 self assessment tax returns – Finalised accounts – Projected accounts More flexible lenders can use qualified accountants references to show: – Pay slips from your own company/family company – Handwritten pay slips – If paid in cash.

Also, occasionally lenders can accept proof of rental income using the tenancy agreement and bank statements.

Other incomes lenders may accept

Investment income Rental income Trust income Income earned overseas Income earned in a foreign currency Bursary Stipend Pension State benefits and more.

 

Think carefully before securing debt against your home, your home may be repossessed if you do not keep up repayments on your mortgage.

 

 

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The guidance and/or advice contained within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK.

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