Are you self-employed and wanting to purchase a home? There are several things you need to know when it comes to being self-employed and taking out a mortgage: the requirements and how to boost your chances of getting a mortgage when you’re self-employed.
We all know just how tough it can be to get a mortgage, and if you’re self-employed, it can sometimes appear even more challenging. This doesn’t mean that you won’t be able to get a mortgage, there just might be a little more work to do.
How do I know if I am classed as self-employed?
Mortgage lenders will consider you as self-employed if you are a sole trader, freelancer, an independent business owner or an independent contractor.
Is it harder to get a mortgage if you’re self-employed?
Getting a mortgage when your self-employed is not impossible, but it does require a few extra steps as mortgage lenders have more stringent rules that they need to comply by to ensure you can afford the loan. One of the biggest obstacles to overcome is providing what you earn each month and proving you have a reliable income.
What are the requirements?
When applying for a mortgage, you will have access to the same variety of mortgages as any other person and you’ll need to complete the same affordability tests. To prove income, you will need two or more years of certified accounts. It could help to have these accounts provided by a qualified chartered accountant as it gives credibility and reliability to your monthly income and outgoings.
You will also need SA302 forms or a tax year overview for the previous 2-3 years and evidence of any upcoming work.
To prove your identity, you will need your passport, driving license, three months of utility bills and six months of bank statements.
In addition to looking at your accounts and bank statements, the lenders may ask you questions relating to your catalogue credit accounts, outstanding loans, hobbies, financial agreement, childcare, and holidays.
How can you improve your chances of getting a self-employed mortgage?
There are a few things you can do before applying for a mortgage that can make it that bit easier.
Having a larger deposit and a strong credit score can help you get a mortgage, as well as registering for the electoral roll and correcting any mistakes on your credit report. As you are self-employed, having proof of regular work and providing future commissions may also help you.
Lenders will also go through your bank statements to view your spending habits and if you’ll be able to cover the cost of the mortgage repayments, so cutting down on any impulse purchases will be beneficial.
If you have any questions about applying for a mortgage, or you’d like to go through all the available options that are right for you, get in touch with one of our expert advisers who can help you work everything out from start to finish.