There's no such thing as a 'self-employed mortgage', there are however a few more hoops that you'll need to jump through to get there. But don't let that put you off, it just takes an organised approach. Working closely with your mortgage broker and accountant, letting them know your plans well in advance (ideally at least twelve months) so that the right preparation can be done to improve your chances of mortgage success.
Preparation is Key
Proof of income - Lenders will want to see proof that you can afford a mortgage and that your business is sustainable. You may need to provide up to 3 years' of accounts to evidence your financial position.
Credit Report - A good credit history and score will improve your chances of getting a mortgage. Again, the sooner you look into your report the better. You can download a copy of yours here.
Talk to a mortgage broker - We know the mortgage world inside out and will be able to match you with a lender that fits your unique circumstances; whether that be a lender that accepts less than 2 years' accounts, one that will factor in retained profit etc. It doesn't need to be a stressful process.
What documents will you need to support your mortgage application?
Documentation requests vary from lender to lender and case by case. However, there are a few documents that are commonly asked for by most lenders;
SA302 & Tax Year Overviews
Your SA302 form shows your tax breakdown and evidences earnings based on your last tax return. To get your SA302 form you need to:
log in to your HMRC online account.
go to the “Self Assessment” section.
then click on “More Self Assessment details”
Choose 'Get your SA302 tax calculation' and download/print your form there
You'll also need the corresponding tax year overview.
Lenders will use your statements to confirm your income and assess your expenditure. Keep this in mind in the lead up to applying for a mortgage and try to avoid things that lenders may not view favourably i.e. unarranged overdraft usage, frequent gambling etc. Lenders may request up to 6 months worth of statements.
Many lenders will ask for certified accounts certificates signed by an accountant.
Proof of Deposit
Some lenders may ask to see proof of the deposit being declared on your application. You will need to have evidence such as a savings account statement to show this.
Providing a copy of your credit report to your broker will allow them to determine exactly what route to go, minimising the chances of a declined application and ultimately wasting time. Download a multi-agency report here to get the complete picture. Checking your report early will give you some time to fix any errors that may be on there and time to work on improving your score if needed.
How does a lender use your Credit Report?
Your credit report provides lenders with your credit history and will be a good indication to them on how you have managed your finances in the past i.e. if current commitments are paid on time, your credit card usage etc. In short, they use them to help determine how much of a 'risk' it would be to lend to you.
Ready to speak with a broker?
Give us a call today or drop us a quick message here and we'll be more than happy to help.
Need Financial Planning Limited is an appointed representative of Invicta Financial Solutions which is authorised and regulated by Financial Conduct Authority. You can check this on the FCA's Register by visiting the FCA's website www.fca.org.uk or by contacting the FCA on 0800 111 6768.
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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT