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You should find it easy to get a Self-Employed mortgage provided that you’ve worked for yourself for over a year, your credit rating is good and you have a deposit saved up.
What is a Self-Employed mortgage?
A Self-Employed mortgage isn’t a specific product – you’ll apply for the same mortgage deals as everyone else. The main difference if you’re a Self-Employed mortgage applicant is how you prove your income.
A mortgage provider will see you as Self-Employed if you own 20% or more of a business registered in England, Scotland, Wales or Northern Ireland. You could be a sole trader, running a limited company or in a partnership.
In the past, self certification mortgages were popular for the Self-Employed, but the Financial Conduct Authority banned these products after the credit crunch.
How much can I borrow on a Self-Employed mortgage?
You should be able to borrow the same amount as an employed applicant, as long as you can evidence your income and the figures can support the borrowing, based on the lender’s criteria. Because Self-Employed people can have a varied income month to month, mortgage lenders want to see tax records to enable them to calculate your average income.
What deposit will I need?
The standard deposit is 10% to 20%, although you can find some mortgages with a 5% deposit. You will need a good credit rating for these, and the interest rates may be a little higher. If you can raise more than 15% you’ll have a much wider choice of mortgage lenders and lower interest rates.
A mortgage calculator will help you see how a higher deposit will reduce the monthly repayments on your mortgage. Make sure the payments will be affordable, as if you fall behind your home may be repossessed.
How will your Self-Employed income be assessed?
When applying for a mortgage, an employed person states their salary and proves it by showing recent payslips. For the Self-Employed however, there’s a little more involved.
Lenders want to see two years of tax submissions in the form of Tax Calculations and Tax Overviews. These documents are readily available from the HMRC portal or your accountant. These documents states your income for the year and tax paid.
There are some lenders who will assess income on one year’s trading, if you have only been trading a short time.
Your credit rating is also important and every lender will check it. A poor credit score will reduce your choice of lenders and could mean you’ll be charged higher mortgage rates.
Lenders reserve the right to request additional details in support of the application and you may be asked to provide further income information.
How do you improve your chances of being accepted by a lender?
It’s best to wait until you have been Self-Employed for two years and have all the records you need. Not many lenders will take you on if you have less than a year’s accounts – although it’s not impossible to get a mortgage in this situation.
To get mortgage approval you need to have all your documents ready – tax forms, valid passport ID and bank statements. Checking all these before you start looking for a home can help avoid disappointment and delays.
How can a Mortgage Broker help the Self-Employed?
Getting a Self-Employed mortgage is easy if you get the right advice, and at the Mortgage Marketplace we’ve helped hundreds of Self-Employed people buy a home. Our mortgage advisers know the market and the providers who will accept your specific situation.
We take the stress out of finding a mortgage: we compare mortgage products across lots of lenders, looking at fees, rates and criteria in recommending the competitive options.
We’ll also help identify the documents you will need for a successful application. We’re authorised and regulated by the Financial Conduct Authority, so contact our registered office today to see how we can help you achieve your property goals.
Frequently Asked Questions
Call us today on 0800 170 7474 to discuss your borrowing potential and eligiability.
We believe in being competitive and transparent on fees.
Your initial mortgage consultation is free. You won’t be asked to pay a fee until we have submitted an application on your behalf.
Our fees depend on the product – see the list below or speak to an adviser.
Residential Mortgage & Remortgage
Application fee of £395.00 payable on receipt of the lender’s decision in principle and our broker fee of £595.00 payable on receipt of mortgage offer. Total fees payable – £990.00.
Buy-to Let Mortgages & Remortgages
Application fee of £395.00 payable on receipt of the lender’s decision in principle and our broker fee from £595 up to 0.50% of the mortgage offer. For example, loan amount £200,000, broker fee payable could be £1,000.00. Total fees payable £1,395.00. A minimum broker fee of £595.00 will be applied on all buy-to-let applications.
Equity Release Mortgages
Application fee of £395.00 payable on receipt of the lender’s decision in principle and our broker fee of £1100.00 payable on completion of your mortgage. Total fees payable – £1,495.00.
Credit Repair Mortgages
Application fee of £395.00 payable on receipt of the lender’s decision in principle and our broker fee equal to 0.5% of the mortgage offer. For example, loan amount £200,000, broker fee payable could be £1,000.00. Total fees payable – £1,395.00. A minimum broker fee of £595.00 will be applied on credit repair applications.
No fee will be charged by us. You will receive a free quotation from the policy provider.
Typically, the mortgage process will take 2-6 weeks to reach approval.
A mortgage offer is usually valid for 6 months.
Please be aware, the process is currently taking longer due to Covid-19. Please see question ‘How has Covid-19 affected the mortgage market?’.
Whilst you are not required to take out a life cover, our job is to ensure your mortgage is affordable, no matter what. It may not be nice to talk about, but if something were to happen to you, you want to know your family and investment are safe.
We will advise on all the options available and provide a no obligation quote from our partner providers.