Documents for a Self-Employed Mortgage – What Do You Need?
There’s a common perception that it’s difficult to get a mortgage when you’re Self-Employed.
Fortunately this isn’t the case – most lenders will accept you if you work for yourself. The main thing is proving your income, which works differently than for a regular employee.
What is a Self-Employed Mortgage?
There are no mortgage products specifically for the Self-Employed. You’ll apply for the same mortgages as an employed person. The difference is in how you prove your income.
With an employed mortgage application, the applicant simply states their salary and supplies payslips to confirm the details. But when you’re Self-Employed, your income can be more unpredictable. Because of that, mortgage lenders will want to see more information to reassure them that you can afford the repayments.
You may have heard of self certification mortgages, which were popular with Self-Employed people. These no longer exist – they were banned by the Financial Conduct Authority over a decade ago.
What Documents do you need for a Self-Employed Mortgage?
The documents you need for a mortgage might differ by lender. You will certainly be asked for proof of identity – a UK photocard driving licence or passport, plus proof of address from recent bank statements or utility bills.
The proof of income needed can vary according to how your business is set up.
Sole traders and partnerships: You will usually need one to three years’ tax calculations. You can print these out from the HMRC website, supply self assessment tax returns (SA302 forms) or submit a summary from your accountant.
Limited Company: You will need certified accounts for the last one to three years. Each year’s accounts should state your salary. If not, you might need to supply P60 forms or tax calculations.
Bear in mind too that the lender will check your credit rating. You build up a good credit score from responsible financial activity – paying your credit card on time and repaying loans and overdrafts with no issues. If you’re concerned about your credit score, you can check your record with many credit check websites for free. https://www.checkmyfile.com/credit-report.htm?ref=what-life&cbap=1
How do you improve your chances of being accepted by a lender?
Any lender wants to be assured that their customers have enough funds to pay back the mortgage. They will be looking for a successful business that generates a steady income and is ideally growing over time.
Here are some ways you can improve your chances of being accepted:
- Wait until you have at least two years of certified accounts
- Increase your income if possible – take larger dividends in the months before you apply for the mortgage
- Submit evidence of new contracts and upcoming business deals
- Have a good deposit – more than 20% will greatly boost your chances
How can a Mortgage Broker help you with your documents if you are Self-Employed?
Mortgage Brokers have lots of experience in helping Self-Employed people find a good mortgage deal. We can anticipate problems in advance and recommend lenders likely to accept your specific financial situation, first time.
Our consultants know what each lender requires in customer documentation and what they are looking for. We’re registered in England and authorised and regulated by the Financial Conduct Authority, giving you confidence that we are a helpful and independent source of mortgage expertise.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.