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Getting a self employed mortgage is usually more difficult than with an employed applicant due to the increased risk to the lender however, the good news is that there are lots of great mortgage products out there specifically designed for you.
Here are the most popular income types for self employed mortgages:
Yes, of course. Self employed applicants can get a mortgage, however, it’s all about choosing the right lender for you, it’s very difficult to get this right without using a professional mortgage advisor.
Here is a list of mortgage situations we can help our self employed clients with:
As a mortgage broker, we are able to access 1000s of mortgage products on your behalf, to try and locate the perfect one for your situation as a self employed applicant.
During your free mortgage appointment, your mortgage advisor will work out how much you can borrow for a mortgage, look to see if you can obtain a deal with either a high street or if you’ll need a specialist lender, and provide you with figures on how much roughly it’s going to cost you per month.
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You will typically need to have been self employed for at least two years, as most lenders will ask to see evidence of that time frame.
In some cases, there may be lenders who only need one year.
The first step for being accepted for a self employed mortgage is to speak with an experienced mortgage broker who will listen to your objectives, personal and family situation, and find out about your source(s) of earnings and affordability.
Don’t worry about how long you’ve been self employed for, how many years accounts you have, or if you’ve recently changed employment types etc until you’ve spoken with an expert.
The information you’ll read about online etc isn’t always accurate and most lenders do have a sensible approach to lending for their self-employed mortgages.
Secondly, once your mortgage broker has all the facts, they are then able to research the right lender and the best deals that are available to you.
Thirdly, a recommendation, your mortgage broker will utilise their experienced and in-depth knowledge of self-employed lending criteria to present the best way forward for your individual situation.
After the call, you’ll then have an accurate idea of how much you can borrow on a mortgage, whether it’s possible with either a high street or specialist lender, and how much roughly it’s going to cost you per month.
Yes, you have a small chance of getting a mortgage with no accounts. Whether you will be considered will be based on how much you are earning, what profession you work in and how much cash you have available for a deposit.
Typically, a minimum of 1 year’s accounts is required, however, there are some exceptions as above.
If you are new to self employment, we’d always recommend running your situation past an experienced mortgage broker ahead of making any plans, so you know your options.
You don’t want to be making an offer on a property without knowing that you can get a mortgage.
Mortgage lenders use lots of different ways to assess your earnings if you’re self employed. Self employed mortgage criteria really are a minefield of information and changes on a regular basis.
If you’re wanting an accurate idea of how much you can borrow for a new mortgage or remortgage, then it’s worth chatting to a specialist self employed mortgage advisor to learn about your options.
Examples of income for self employed mortgages include:
A self employed mortgage application is no different to an employed mortgage application, however, it’s just harder to evidence income and affordability which makes up a big part of the risk for the lender.
It’s strange really, you can have a limited company owner responsible for paying their employees wages find it much harder to get accepted for a mortgage than one of their own employees only a day into their employment.
However, mortgage lenders work on the facts, they use historic statistics which show that repossessions and missed payments are much more likely to occur with newer self employed customers. Also, since the credit crunch, mortgage lenders have strict guidelines and regulations to adhere to.
Only occasionally, as a self employed person, if your mortgage application does not fit the lending criteria of a high street lender and we must go to more specialist, the interest rates can be slightly higher.
Usually, we can place most self employed mortgages with regular high street lenders meaning they are paying the same rate as other employed customers.
Interest rates are priced on risk to the lender, therefore, the more books you have showing steady income and the bigger your deposit, the better rate you will qualify for, both on the high street and specialist.
It depends on the type of mortgage! Standard mortgages can run until the age of 80 to 85, retirement interest only mortgages and equity release mortgages can run for life.
What kind of mortgage product for you will depend on:
Luckily, here we can advise on the full range of later life lending products that are in the UK. If you are over the age of 50, you can read more about the mortgages for over 50’s here.
No, not usually, a self employed person does not need a bigger deposit than an employed colleague to qualify for a mortgage.
Bear in mind that having a bigger deposit may give us more self employed mortgage options in which lenders we can approach and may also allow you to qualify for lower interest rates.
All mortgages work in bands based on the loan to value ratio of the loan, and often if you’re close, putting a big more money down as a deposit will allow you to qualify for a better deal. The bands vary from lender to lender, so every customer is on a case-to-case basis.
For example, lenders may have a 95% interest-rate band, a lower 90% band, an 80% and a 75% band.
Your mortgage broker will guide you accordingly here with a view to save you money on your mortgage if additional deposit funds are available.
Gifted deposit mortgage options are available to the self employed also such as from parents etc. Gifted deposits can be used by both first-time buyers and home movers to help keep mortgage costs to a minimum.
This is not a textbook answer, however, here are some examples of what classifies as self employed:
Often, if you are a shareholder of a limited company and a director, for other products and services you’ll be classed as ‘employed’ by your company. With a mortgage, this works differently, you’re classed as self employed if you own more than 20/25% of the shares where you receive your main income.
Not as such, there are no specific mortgage deals for the self employed, however, some lenders are better with self employed criteria than others.
The mortgage deals and interest rates are the same whether you are employed or self employed.
Typically, it’s harder for a self employed applicant to evidence their income than an employee. This is due to the income split factors that are involved such as PAYE, dividends, net profit, retained profits, employer pension contributions etc.
There are no special requirements in place or extra barriers for self employed mortgage applicants.
The reason that many self employed mortgage applicants may find the process difficult, is usually down to evidencing their income.
A lender will only count taxable income, and they will need sufficient proof that your income is reliable.
To prove your income as a self employed mortgage applicant, you need to give the lender either full accounts and/or your HMRC tax calculations/overviews or PAYE payslips.
A certificate will be requested from your accountant may also be requested by your lender to support any income documents that you produce. Your accountant will need to be qualified and an Associate or Fellow with one of the leading professional bodies for the certificate to be valid.
If you have retained profit within your business or are currently or historically been making large employer pension contributions, there are some self employed mortgage lenders that are good at looking at these cases individually to reassess your profit and income.
A reassessment in this way can have a huge impact on your affordability score and allow you to borrow more money if required. Leaving money in your business to de-risk or being sensible and saving into a pension should not present a challenge to self employed mortgage customers.
If you are a contractor, you may be required to provide evidence of your day rate along with any signed contracts to prove that you have these in place.
Business bank statements might also be requested by your new mortgage lender to prove that you’re running a legitimate business and to back up your income claims.
We understand that being self employed can present every individual in a different light when applying for a mortgage. Entering your income into an application form box will be difficult for self employed customers, therefore, it’s always good to work alongside a professional mortgage broker for guidance and support.
Unfortunately, as a self employed mortgage applicant, it can often be a struggle to get a mortgage. This is where a mortgage broker can come in handy.
A mortgage broker will:
We have helped many different self employed customers obtain a mortgage, even when they thought all the odds were against them.
Now is your chance for us to help you secure a mortgage as a self employed applicant.
Having a mix of employed income along with self employed income is popular. Many clients now have a side hustle where they receive extra income.
If you need to use both your employed and self employed income towards your mortgage application to allow you to borrow enough that’s fine.
You’ll need to provide both your PAYE payslips from your employed income that will show your salary along with any overtime, shift pay or bonuses that you receive along with evidence of your self employed income. Examples of this include your HMRC self-assessment or accounts etc.
Yes, it is possible to get a self employed when you have bad credit. Whether you are looking to purchase a new home or remortgage for debt consolidation, we’ll have mortgage options available for you.
Self employed mortgages with bad credit options including:
A good place to start with your bad credit mortgage options would be to get an up-to-date copy of your credit file showing details of your bad credit such as amounts, dates and whether it’s now settled.
The most popular type of bad credit is a CCJ mortgage. With any bad credit, your mortgage lender will be interested to know the exact dates it started/happened, the amounts it was for, and whether it’s now cleared. It’s all about meeting stringent criteria of the new mortgage company.
Once your mortgage broker will knows the facts, they’ll recommend the best lender for you based on your individual circumstances.
Not usually, however, a business plan might be requested by your new mortgage lender.
A business plan would include a profit and loss and cash flow forecast from you and your accountant to back up any income claims.
Your mortgage broker will let you know as and when a business plan is required.
The documents that a self employed mortgage applicant will need to provide when applying for a new mortgage are:
As you can see from above, apart from the proof of income, the other documents are the same as an employed applicant.
We’ll package your case well ahead of it going to a mortgage lender, however, lenders have access to a more significant amount of data than us, therefore, other documents may be requested by them along the way.
We’ll help you with any document requests that we meet along the application process.
Here are some of the things that we recommend to our self employed mortgage clients so that they can improve their chances of getting accepted.
Being organised with the above will increase your chances of being accepted for a mortgage and securing an offer for the property that you want to go for.
The subject of self employed mortgages is a minefield and is very much criteria based. It’s always recommended to work alongside a mortgage broker to further increase your chances of success.
Our team are here 7 days a week early in the morning until late at night to answer any questions or enquiries you may have.
We don't ask for any payment until we have gone through the mortgage process successfully.
Throughout the mortgage journey, you will have an allocated case manager by your side.
Our service is tailored to the customer and their situation as we believe our customers are the heart of the company.
We want to make sure that our customers are protecting their future and taking out the correct insurance policies.
We have worked with many self employed customers through searching 1000s of mortgage products to find the best deal for you as a self employed applicant.
Our team are experienced in dealing with many self employed cases and can provide you with the support and advice you need to help back up your application.
Going through the mortgage journey as a self employed applicant can be quite a challenge. Our mortgage advisors utilise their experience within the mortgage industry to overcome any obstacles you may experience.
Most of our customers prefer a fixed rate mortgage deal to ensure that they know how much their mortgage is going to cost for either 2, 3, or 5 years for peace of mind. Fixed rate mortgages are available like all mortgage deals for self employed applicants.
How long you decide to fix for will depend on your future objectives with the property and your attitude towards risk and interest rates.
Other variable mortgage deals are available also which can change when interest rates increase or decrease.
Offset mortgages work well if you’re a regular saver and like the option of more flexibility with your mortgage. Typically, the costs to operate an offset mortgages are more than with a regular fixed rate product due to the additional administration involved, however, for the right individual, the interest savings can be huge by utilising the savings account.
With an offset mortgage, your mortgage amount will be offset by any funds you have in your savings account that runs in conjunction with your mortgage.
For example, if you owed £100k on your mortgage but you have £20k in your connected savings account, you’ll only pay interest on £80k meaning more of your monthly payment will be going off the capital amount.
For an avid self employed saver, an offset mortgage account can save a lot of money. Maybe you save regularly for your personal tax bill or simply for a rainy day, either way is fine. The balance can keep increasing or decreasing as you save or spend the money.
Self employed mortgages are available in both joint and sole names. Whether your partner is self employed or employed that’s fine if you can provide proof of income to support your application.
With a joint mortgage, during the legal process you’ll have the option to buy tenants in common or joint tenancy, your conveyancer will run through these options with you in more detail.
Bad credit self employed mortgages are available, including mortgages for people with CCJs, missed payments and adverse credit.
A good place to start with your bad credit mortgage options would be to get an up-to-date copy of your credit file showing details of your bad credit such as amounts, dates and whether it’s now settled.
With any bad credit, your mortgage lender will be interested to know the exact dates it started/happened, the amounts it was for, and whether it’s now cleared. It’s all about meeting stringent criteria of the new mortgage company.
From looking at your credit report, your mortgage advisor will be able to recommend the best way forward for you. The good news is that we work with both high street and more specialist lenders to find you the best deal.
Self employed applicants can qualify for a further advance mortgage too! A further advance mortgage is used to release equity from your property as an add on to your existing mortgage.
Typically, this new lending will be on different terms to your original mortgage amount and will have a different interest rate and end date.
With further advance mortgages for the self employed, it’s new application therefore documents including proof of income is required.
You might consider a further advance mortgage if you’re in the middle of a fixed rate deal and would like to release some money to pay for home improvements for example. An alternative to this would be a remortgage for home improvements with a new lender, however, if you’re in a fixed deal early redemption charge could apply from switching.
If you are self-employed and looking for a further advance mortgage, other options your mortgage broker will consider with you are secured loans and a remortgage.
Whether you are looking to remortgage to secure a new fixed rate, raise money, or something else we’re here to help. Our self employed remortgage advice team are very experienced in helping clients in all remortgage situations.
Usually, the main reasons why our self employed clients seek advice is to remortgage for a new fixed rate deal, to remortgage to raise money for home improvements, to remortgage to consolidate debts, or something a little quirkier such as to remortgage to remove a name from a mortgage.
If you are over the age of 50 and are looking at your remortgage options, there will be options available for you also.
If you have enough equity available, when you remortgage, you may have the option to release equity to fund home improvements etc. You’ll also be able to look at extending or shortening your mortgage term if required.
An alternative to a self employed remortgage is a product transfer mortgage, this is where your existing lender offers you a new deal to stay with them. No documents are usually required for a product transfer mortgage, therefore, if you’re struggling to prove your income or newly self employed these can work well until you have your documents in order.
Your mortgage broker will help you consider this deal and compare it to what you can get elsewhere with a view to save you money.
For self employed first-time buyers, a good place to start your home buying journey is by getting ‘mortgage ready’. This involves speaking to a mortgage broker early in the process ahead of viewing properties to find out how much you can realistically borrow on a mortgage and how much this is going to cost you per month.
Your mortgage broker will consider the following before letting you know how much you can borrow:
Getting mortgage ready and having a mortgage agreement in principle in place will present you in a good light to estate agents when you are ready to start viewing properties.
For self employed applicants, getting a mortgage can be trickier therefore if you are looking to move home, it’s always best to plan early ahead of putting yours up for sale.
If you are in the middle of a fixed rate deal, your mortgage broker will consider your porting options that are available with your current lender and compare these to what deals are available elsewhere.
Maybe you are looking to move for work, into a bigger or smaller home, or to be close to schools. Whatever your drive, we’re here to help you with all your self employed mortgage options.
With all self employed mortgage applications, you’ll need to evidence your income as discussed further on this page.
If you have been a council or housing association tenant for a while, you might qualify to buy your home for a discounted price.
If you are self employed and looking to explore your right to buy mortgage options, a good place to start would be to call the council to find out what the sale price of the property is and how much discount you’ll qualify for.
Usually, the longer you’ve been in the property the more discount that you’ll qualify for. In some cases, the discounts can be significant.
With a self employed right to buy mortgage, no deposit will be required as, due to the discount received, you’ll already have equity in the property meaning the risk to the mortgage lender is low.
As part of the self employed right to buy mortgage application you’ll need to evidence your income along with any credit commitment such as personal loans and credit cards.
Sometimes, with a right to buy mortgage, you’ll have the option to borrow more money on your mortgage to fund home improvements such as buying new windows, a bathroom, or a kitchen refurb etc.
Our mortgage broker team are experts at helping self employed customers with their right to buy mortgage applications and options.
Self employed Interest only mortgages are a brilliant solution for the right applicant. Unlike traditional repayment, with an interest only mortgage deal your monthly payment will consist solely of interest. Therefore, at the end of the mortgage term, you’ll be required to pay your existing loan back as a single lump sum.
For the self employed, interest-only mortgages can work well if you have a repayment plan in place that you can evidence to the lender.
Examples of a repayment plan include the sale of an investment property or by using your pension tax-free lump sum.
With self employed interest-only mortgages, options such as fixed rate interest periods and overpayments will be available to you. Your mortgage broker will be able to run through these with you as options do vary depending on which lender we’d recommend for your personal situation.
A self employed interest only mortgage customer is typically a large earner, has a large deposit, and has a repayment plan in place from the outset. Often, they also make investment such as in pensions, stock investments, or buy to let property.
If you are over the age of 55, other retirement interest only mortgages may be suitable for you, so it is important that any alternatives are considered as part of the mortgage advice process.
For the self employed, investing in buy to let property can be an attractive proposition to supplement income either now or in retirement.
Whether you are a self employed first-time landlord or experienced property investor we’ll have mortgage options for you.
With a self employed buy to let mortgage application, you’ll need to evidence your income and put a good-sized deposit down on the property, typically a minimum of 20/25% is required depending on the lender.
The rental income that you’ll receive from the property will also be considered when calculating how much you can borrow along with your income, outgoings, and credit score.
Getting a self-employed buy to let mortgage is more complicated and trickier than getting a residential mortgage due to additional checks and tighter lending scores that are involved.
Here at UK Moneyman, we have a specialist buy to let mortgage broker team who are available 7 days a week to answer all your questions and help you with your application. It’s also good to work alongside your accountant so they can ensure that you’re operating in the most tax-efficient way for your personal situation.
Shared ownership allows you to get on the property ladder by purchasing a percentage of a property that is registered on the Help to Buy Shared Ownership scheme.
Self employed shared ownership mortgage deals are available with options that include fixed rate deals of typically 2, 3, or 5 years, along with variable rate deals.
With shared ownership self employed mortgages, you typically buy a percentage of the property between 25% and 75% and then pay rent on the remaining 75% to 25%.
They are usually available to first time buyers and home movers who are looking to keep the cost of the mortgage down or who wouldn’t otherwise be able to buy a property due to the price. There is other qualifying criteria such as maximum earnings and credit score etc associated with the scheme.
Staircasing options are available at certain points of the contract that allow you to purchase more of the property to increase your equity amount.
Shared ownership mortgage deals can be beneficial for the newly self employed or those that for one reason or another have low income due to the lower mortgage that is required.
There are various schemes available on certain property developments so it’s important to speak with a mortgage broker early on in the process so you know how much you can borrow and how much it will cost you per month.
It’s also important to seek great legal advice here in order to run through your understanding of the shared ownership contract and any rules that are in place.
We understand that for the self employed income is not always stable for one reason or another, so the use of personal loans and credit cards is more likely.
Clients can often become stuck between and rock and a hard place when their credit card balances don’t seem to decrease, and they’re just stuck paying the minimum payments.
Self employed debt consolidation mortgage options are available providing you have enough equity in your property and meet criteria and affordability checks.
A debt consolidation mortgage is not without risk and professional advice should be sought to avoid putting yourself in a worse financial situation. As you are taking unsecured credit and securing this against your home, if you fail to meet your mortgage payments your home may be repossessed.
Our mortgage broker team are highly experienced with dealing with debt-consolidation mortgages for the self employed and can help answer your questions and explore your options.
If you have owned your property for a few years now you will most probably have built up some equity. Often, our self employed clients look to do a capital raising remortgage to unlock some money to pay for home improvements, a large purpose or to repay debts.
If you are considering your self employed capital raising mortgage options, a good place to start would be to look online on property websites such as Rightmove and Zoopla to find out what properties like yours are selling for in your area. This figure will be a good starting point for a valuation.
The second thing to do it to find a recent mortgage statement to see how much you currently owe, how many years you have left, and whether there are any early redemption charges that apply if you were to switch.
If you are in the middle of a fixed rate deal and there are alternative products such as a further advance mortgage or a secured loan we can consider.
If you’re not tied in and there are no early redemption charges, you’ll be free to remortgage and look at increasing your borrowing.
If you are newly self employed, or your income has been more unstable since you took out your existing mortgage you might find it harder to get accepted for a mortgage now. It’s always best to have a specialist self employed mortgage broker specialist on your side to help you navigate the maze of lending criteria.
For a self employed applicant, a secured loan, often called a second charge mortgage can be a great lending solution.
Often, self employed clients are mid-way through a fixed rate deal, or they’ve been declined a further advance or remortgage elsewhere consider a secured loan for one reason or another. For a self employed applicant, this might be due to unstable income or being new to self employment.
Secured loans are typically higher interest rates than regular mortgages due to the additional risk taken on by the lender however, they can be more flexible to obtain.
A self employed secured loan can be used for home improvements, paying off debts, investing in buy to let property, or something else.
Alternatives to secured loans for the self employed are remortgages, further advances and bridging finance.
If you are retired or close to retirement there are a range self employed mortgage products available to you. Which product type is most suitable will depend on your age, your income, your affordability, and your plans for the property.
Often, self employed clients can be semi-retired and are looking for ways to move home, remortgage to pay off an existing mortgage deal that is ending soon, supplement their income, pay off debts, or release capital to fund home improvements.
There are various products available to our older self employed clients including:
We have a specialist later life team here at UK Moneyman to help you consider all the pros and cons of each self employed retirement mortgage that are available and recommend the best way forward for you.
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UK Moneyman Limited is Registered in England, No. 6789312
Registered Address: 10 Consort Court, Hull, HU9 1PU.
Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk
UK Moneyman Limited is Registered in England, No. 6789312
Registered Address: 10 Consort Court, Hull, HU9 1PU.
Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk
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