Maximising Your Mortgage Potential When You Are Self-Employed, A Partner, Or A Limited Company Director

The category: Self Employed Mortgage

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If you or your partner are self-employed and looking to secure a mortgage, this comprehensive guide will show you how to present yourself as an attractive candidate to lenders. While applying for a self-employed mortgage may seem daunting, with the right approach, you can access a wider range of lenders and borrowing options. Our expert advice will help you understand the nuances of the self-employed mortgage market and how to ensure your financial reliability matches that of a salaried applicant.

What Sets Self-Employed Mortgages Apart?

Let’s start by clarifying that self-employed mortgages are essentially the same as standard mortgages. The key difference lies in how we present your application to lenders. Our goal is to demonstrate your financial stability and make you an appealing prospect to secure the mortgage you need. It’s crucial to work with an advisor who understands the intricacies of the self-employed market and is familiar with various payment structures, ensuring you have access to the best possible lender options.

Who Falls Under the Category of Self-Employed?

Understanding whether you fall into the self-employed category is important. The following are examples of individuals that lenders may classify as self-employed:

  1. Company directors and shareholders, typically with a 20%-25% plus Shareholding
  2. Sole traders
  3. Day rate contractors
  4. CIS contractors and Umbrella companies
  5. Freelancers

Essential Documents for a Self-Employed Mortgage

To streamline your mortgage application process, prepare the following documents when consulting with an advisor. Though not all may be required, having these on hand will help your advisor understand your business and find the ideal lender for you:

For All Self-Employed Applicants:

  • Personal tax return and Tax Computation Forms (old SA302) for the last 18 months.
  • 3-6 months’ bank statements showcasing consistent income.
  • A projection of your next year’s earnings by your qualified accountant (if applicable).

For Company Directors:

  • Full financial company accounts, not older than 18 months, signed by you and your qualified accountant.

For Day Rate Contractors or Umbrella Companies:

  • A signed copy of your contract, indicating the day rate and hours worked.
  • Previous contracts and employment history might also be required.

For CIS Contractors and Umbrella Workers:

  • One or more invoices or wage slips (ideally 12 months’ worth) to establish income.

Tips to Boost Your Chances of Getting a Self-Employed Mortgage:

  1. LinkedIn Profile: Keep your LinkedIn profile and work history updated as underwriters often check this platform for additional information.
  2. Check Your Credit Report: Though credit history matters, some lenders adopt a commonsense approach, so it’s essential to disclose all relevant credit information to your advisor.
  3. Maintain an Emergency Cash Fund: Having an emergency fund showcases your ability to handle mortgage payments during lean periods.
  4. Consider a Deposit: A larger upfront deposit reduces the perceived risk for lenders, potentially increasing your chances of approval.
  5. Manage Existing Debts Wisely: Seek expert advice before clearing debts, as this decision’s financial implications may vary for different situations.

By following these tips and providing the necessary documents, you’ll be on the right path to securing the ideal self-employed mortgage for your needs. Remember, professional advice is always recommended to navigate the complexities of the mortgage process successfully.”