Being self-employed shouldn’t automatically mean securing a mortgage will be a challenge. With over 4.2 million British workers now classified as self-employed – and expectations the sector will only continue to grow – it is more important than ever before to know just what extra considerations are needed to secure a mortgage.
Tanya Elmaz, Director of Intermediary Sales at Together said: “Self-employed workers may feel like the process of applying for a mortgage or re-mortgaging their property is much harder – but it needn’t be like this. You may need to shop around but there are quite a few options available. One avenue to pursue could be talking to specialist mortgage providers and brokers, who will be able to look into your individual circumstances, allowing you to achieve your property ambitions.”
Here, Tanya Elmaz at Together, outlines three of the most important elements for self-employed applications:
1. Acknowledge the differences
Most high street lenders will require at least two or three years’ worth of information when completing an application which can prove tricky for those with less regular income patterns, or who have recently become self-employed. However, specialist lenders typically require just one year’s worth of accounts. Proof of ID and address, bank details, evidence of your business income and expenditure and SA32 forms or a tax-year overview will also be needed. On top of this you may also need to show a high street lenders your operating and travel costs as well as spending on office rental and supplies. Having all your documents ready will help with a smooth and stress-free mortgage application process. To help, we have an application checklist to help guide on what’s needed.
2. Shop around for the best option
Although there are many lenders that will consider self-employed customers, some high street lenders with ‘tick box’ processes may struggle to approve applications from potential borrowers who are self-employed or have more complex incomes. If variable income or a short period of trading is an issue in the mortgage application journey, consider shopping around. Specialist brokers and lenders can take a customer’s whole financial situation into account.
3. Remortgage considerations
For the self-employed, remortgaging can be slightly more complicated and requires more preparation as there will be different considerations depending on whether you were self-employed when you first applied for your initial mortgage. Provided you can prove your self-employment track record and earnings, you’ll probably be able to access the same options. Some lenders may require you to remortgage with them, or you may be able to shop around. The best thing to do before considering any mortgage changes is to speak to a professional, so you know exactly what routes are available to you.