Are you a sole trader, director of a limited company, contractor or working under an umbrella company?
We understand how frustrating it can be if you don’t tick the conventional box for mortgages. Mortgage lenders have historically tended to be more cautious in their approach to people who work flexibly rather than salaried, permanent employees who have payslips instead of invoices. Some take the position that if you’re self-employed, freelance or a contractor, your income can be erratic and therefore not as secure as permanent staff.
The market is changing. Contractors now account for 14% of the UK’s workforce and according to the Independent Work study in October 2016 by the acclaimed McKinsey Global Institute, the UK has an estimated 14 million independent workers – close to a quarter of our working-age population.* With flexible working becoming more popular, this figure is set to increase so mortgage lenders are having to adapt.
This is where our specialist expertise counts. We have built up robust knowledge of which mortgage lenders will help self-employed clients. Some lenders in the market will accept mortgage applications if you have only been self-employed for one year, instead of the usual two or three years. Ask us about this, if you’re new to the world of self-employment.
New to contracting?
If you’re a contractor on a day rate, here’s a rough idea of what you might be able to borrow. Take your day rate, multiply by 5 (regular working week), multiply that figure by 48 (working weeks per year) and finally multiply that figure by 4.5 (income multiple).
I’m a director of a limited company. Can you help?
If you’re part of a limited company, your total income may be made up of a combination of basic salary and dividend payments. Lenders will usually consider both these elements of your income. We can give help and advice on this. You may have profits to retain in the business, rather than take out as salary or dividends – these can be assessed for mortgage purposes if you so wish.
When you’re self-employed, applying for mortgages can sometimes feel confusing so it’s good to know that you’ll have expert support. We’ll make sure you get the documents you need to support your application – and we can explain in simple terms the difference between an SA302 and a tax overview.
Although the process may seem complicated, it’s not so much a case of proving your income as establishing a figure to assess how much you’re likely to be able to borrow. We understand that your income may vary from one month to the next. It can be feast or famine so trying to work out a typical monthly budget isn’t always straightforward. Some lenders are more flexible than others and will take into account the amount of deposit you have as well as your credit score. Our expert team will guide you through the maze!
As a self-employed person, you will need to prove the income that you are declaring. Generally speaking, lenders need to see two or three years’ of proof of income. Since you’ll be assessed on profits, lenders may want proof that you’ll earn similar in the future so they could ask you about your business and what contracts or clients you have lined up.
We can help you get everything ready.
For self-employed mortgages, the overall cost for comparison is 7.6% APRC.
The actual rate available will depend on your circumstances. Ask us for a personalised illustration.
Am I restricted to certain mortgages?
You should, in theory, have access to exactly the same range of mortgage products – fixed, variable rate and trackers – as everyone else as long as you are able to put down the necessary deposit and prove you can make the repayments on your loan.
Why not fix a free initial consultation with us so that we can get to know you, your business and your circumstances? Simply call 01636 674455 or contact us via the form below.
Three top tips!
- Keep your accounts up to date and your documents in order. Most lenders will need to know your tax calculation for the last three years and usually take an average of the last two years’ income.
- Make sure your accountant, if you have one, is chartered or certified.
- Don’t leave it until you’ve found a property. Talk to us before you even start looking, so we can give you a realistic idea of what’s possible.
You can rely on our specialist knowledge. We are here to help and will do everything we can to give you the best chance of getting the mortgage you want.
Whatever your employment circumstances, there will be a solution. Call us today on 01636 674455 or contact us via the form below.
Your property may be repossessed if you do not keep up repayments on your mortgage.
* cited from Independent Work: Choice, Necessity and the Gig Economy, October 2016, McKinsey Global Institute