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If you’re self-employed, getting a mortgage can feel like a more complex process, but it’s definitely possible. Understanding what lenders are looking for can help you navigate the application process more smoothly.
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Getting a mortgage being self-employed is similar to employed applicants, but there are additional steps. Lenders will want to see proof of your income and financial stability. Typically, they’ll ask for at least two to three years’ worth of accounts or tax returns to assess your earnings. If you’re newly self-employed, this could be a bit more challenging, but there are still options available, particularly if you have a strong credit history and can provide a significant deposit.
When applying for a mortgage for self-employed individuals, you’ll need to provide specific documentation to prove your income. Here’s what you’ll generally need:
Based on a mortgage of £300,000 at 75% LTV and 25 years
Speak with Us | Interest Rate | Mortgage Type | Monthly Repayment Amount | Total Fees | Max LTV |
---|---|---|---|---|---|
3.79% | Fixed | £1,174 | £30 | 75% | |
4.09% | Fixed | £1,198 | £0 | 75% | |
4.12% | Fixed | £1,210 | £1,499 | 75% | |
4.24% | Fixed | £1,224 | £1,025 | 75% |
It’s a common misconception that self-employed individuals automatically have to pay higher mortgage rates. While it’s true that some lenders may see self-employment as a higher risk due to potentially fluctuating income, this doesn’t necessarily mean you’ll face higher rates. By shopping around or working with a mortgage broker at Ascot Mortgages, you can find competitive rates tailored to your circumstances.
How much you can borrow as self-employed applicant depends largely on your income, deposit, and overall financial situation. Lenders will typically lend between four and five times your annual income, but this can vary depending on the lender and your specific circumstances. Using our mortgage affordability calculator can give you a rough idea of what you might be able to borrow.
Use this calculator to determine how much you could potentially borrow for a mortgage, based on the typical salary multiples used by most UK lenders.
Your Results:
You could borrow up to
Most lenders would consider letting you borrow
This is based on 4.5 times your household income, the standard calculation used by the majority of mortgage providers. To borrow more than this, you will need to use a mortgage broker to access specialist lenders.
Some lenders would consider letting you borrow
This is based on 4.75 times your household income, a salary multiple you might struggle to qualify for without the help of a broker. This income multiple is not widely available to customers who are applying directly with a lender.
A minority of lenders would consider letting you borrow
This is based on 5.5 times your household income, a salary multiple you will struggle to get without a broker. 5.5 times salary mortgages are usually only available under very specific circumstances.
Get Started with an expert broker to find out exactly how much you could borrow.
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If one or more of the above apply to you, it’s important to get expert advice before making an application. The right broker can help maximise your chances of approval based on your circumstance.
Lenders usually calculate your earnings based on your average income over the past two to three years. They may look at your net profit if you’re a sole trader, or your salary and dividends if you run a limited company. If your income has increased significantly over the years, some lenders can take your latest year’s earnings into account. However, consistency is key, and any large fluctuations in income will need to be explained.
To increase your chances of securing a mortgage when self-employed, consider the following tips:
Having all your documents in order is crucial when applying for a sole trader mortgage. This includes your tax returns, business accounts, bank statements, and any other relevant financial documentation.
Finding the best mortgage deal when you’re self-employed involves comparing different lender’s criteria to find the most appropriate solution for your needs. Working with a mortgage broker like Ascot Mortgages who understands the criteria for a number of lenders can be invaluable. We can help you find the right deal, whether you’re looking for a fixed-rate mortgage, a tracker mortgage, or another type of product that suits your financial situation.
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To get a mortgage when you’re self-employed, you’ll need to provide at least two to three years of accounts, SA302 forms, and possibly bank statements to prove your income. It’s also helpful to have a good credit score and a significant deposit.
Most lenders prefer you to have been self-employed for at least two years, but some may consider your application with just one year’s accounts.
Gaps in your work history can be a red flag for lenders, but they’re not necessarily a deal-breaker. Be prepared to explain any gaps and provide evidence of your ability to maintain stable income.
If you’ve not been self-employed for long, it can be harder to get a mortgage, but it’s not impossible. Some lenders might accept just one year of accounts, especially if you can provide a larger deposit or have a strong credit history.
Maternity leave can impact your mortgage application if it affects your income, but lenders will usually consider your overall earning potential. Providing evidence of your return to work plan and future income can help.
Self-certification mortgages, where you didn’t have to prove your income, were banned in the UK in 2014. Now, all lenders require evidence of your income through tax returns and accounts.
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Legal
Ascot Mortgages authorised and regulated by the Financial Conduct Authority and can be found on the FCA register (www.fca.org.uk) under reference 776062. The FCA do not regulate some forms of mortgages. The guidance and advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. There may be a fee for mortgage advice. The precise amount will depend upon your circumstances but we estimate it will be £599 per mortgage account. Ascot Mortgages Ltd give you the option to pay a non-refundable fee of £1299 payable with the application. If this option is taken, Ascot Mortgages Ltd will refund any procuration fee received by the lender.
Ascot Mortgages Limited is registered in England and Wales and have their registered office at 8 Webster Court, Westbrook, Warrington, WA5 8WD. The company’s registration number is 06764971.
We are a credit broker, not a lender. We work with the whole of the lending market. We may receive commissions that will vary depending on the lender, product, or other permissible factors. The nature any commissions model will be confirmed to you before you proceed.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY DEBT SECURED ON IT
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