Trusted Ipswich Self Employed Mortgage Broker

It’s absolutely possible to get a mortgage as a self employed person, whether you’re a sole trader, limited company director or partner, CIS contractor, or day rate contractor. With this said, you’re likely to face a few more hurdles along the way than ‘typical’ buyers. This is because lenders are cautious of the fluctuating income levels typically associated with self-employment, and will ensure their interests are fully protected before signing off on a deal.

As part of your application process, you’ll likely be asked to provide a more comprehensive set of financial documents, such as several years of tax returns, business accounts, and profit-and-loss statements. This will provide a clear picture of your income stability and viability as a borrower.

For self-employed mortgage applicants, the deposit requirements are generally in line with those for salaried people. A standard expectation is a deposit constituting 5-35% of the property’s total value. However, this can be influenced by various factors including your unique financial profile, the specific lender’s requirements, and the chosen mortgage product.

Given the income variability associated with self-employment, lenders often view a larger deposit favourably. It not only demonstrates financial security but can grant access to more attractive mortgage terms and interest rates. With this said, it’s still possible for self employed applicants to qualify with the same percentage deposits as traditionally employed ones.

In most cases, lenders prefer to see at least two years of income records from self employed applicants. This is typically enough to give them confidence in the stability and sustainability of your earnings – allowing them to assess your average income, and determine your mortgage affordability.

With this said, at My Mortgage Planner, we understand that every self-employed individual has a unique journey, and are dedicated to finding a path that caters to your specific circumstances. If you have a shorter history as a self employed individual, we can explore lenders who are open to less conventional scenarios.

Getting a mortgage as a self-employed person might seem difficult at first, but can be made straightforward with the assistance of an experienced broker. Much like any other applicant, you’ll go through a process where lenders check if you can keep up with your monthly payments.

Given the general ups and downs of self-employed income, there’ll be more proof required regarding your earnings and financial stability. Lenders will usually ask for things like your business accounts or tax returns. An accountant’s statement can also be helpful.

Post-completion, your mortgage will work much like any other, requiring repayment of capital and interest over an agreed term. Your monthly payments will vary according to your chosen product, deposit, and other factors.

Self-employed mortgage products are home loans designed for those whose income comes from self-employment, freelancing, or owning a business, rather than traditional employment.

The criteria for approval, interest rates, and variety of mortgage products available are essentially the same as for those in standard employment. However, the way in which self-employed individuals are required to demonstrate their income and financial stability can vary. Lenders often look at a mix of both personal and business incomes to assess eligibility.

Being self-employed, you might hear phrases like ‘self-certification mortgages’ or ‘no doc loans,’ but these are largely things of the past. Today, every borrower will need you to provide some form of documentation to validate income.

When applying for a mortgage as a self employed person, you’ll need to provide in-depth proof of your income consistency and reliability. Most lenders require a list similar to the following (though exact specifications will vary according to your exact circumstances and chosen deal):

Proof of Income: Lenders usually require at least two years of accounts or tax returns, and SA302s or tax calculations accompanied by tax year overviews. This helps paint a detailed picture of your income trends.

Business Financial Statements: If you own a business, detailed financial statements can be crucial to securing a mortgage. Profit and loss accounts can offer insights into the business’s performance and, by extension, your earnings.

Credit History: A good credit score is always beneficial. It demonstrates to the lenders that you’re responsible with your financial obligations.

Deposit: Much like any other mortgage, you’ll need a deposit. The exact amount needed can, of course, vary but having a substantial deposit can often facilitate a smoother application process. With this said, it’s still possible for self employed applicants to qualify with the same percentage of deposit as traditionally employed ones.

Affordability Assessment: Lenders will evaluate your spending habits, existing debts and financial commitments to ensure that you can comfortably afford the mortgage repayments.

The exact documents you’ll need to provide as a self employed mortgage applicant will vary according to your chosen deal and lender. We commonly work with lenders that require at least some form of the following:

Business Accounts: Lenders often request up to three years of accounts to gain insights into your earnings and the financial health of your business.

Tax Returns: SA302 forms or a tax year overview for the past two or three years can be a good way for lenders to paint a clear picture of your annual income.

Bank Statements: These offer an additional layer of income verification and give insights into your spending habits and financial management.

Proof of Deposit: Evidence that you have the funds ready for the deposit. The source of these funds may also need to be verified.

Credit Report: Though not a document you provide, lenders will check this to assess your creditworthiness and financial history.

Like most mortgages, the exact amount you’ll be able to borrow is ultimately determined by your unique situation, often boiling down to the stability and consistency of your income (which lenders scrutinise more meticulously for self-employed applicants).

Lenders will typically examine up to three years of your business accounts or tax returns to get a clear picture of your annual income. The more consistent and higher this is, the better your chances of securing a larger mortgage. They’re interested in your average income, profit, and how your business is trending – is it stable, growing, or volatile?

However, each lender has a unique approach, and criteria can vary widely. Your credit score, the size of your deposit, your spending habits, and any existing debts will all be under the spotlight too.

Self-employed individuals, from sole traders, limited company directors, and partnerships to contractors and beyond, can secure mortgages. The key for all self-employed categories, similar to traditionally employed individuals, is to demonstrate a stable ability to meet mortgage repayments.

For sole traders, lenders typically assess profit as income, often requiring a minimum of two years’ accounts or tax returns. This helps them understand income stability and trends.

Limited company directors may find that different lenders have varied criteria. Some assess income based on salary and dividends, while others might consider operating profit plus salary.

Partnerships involve evaluating the income share each partner receives, with documentation to support this income.

Contractors, including CIS and day rate contractors like those in IT, are also eligible. Lenders will usually look at the contractor’s day rate and contract history to assess income.

Remember, there are mortgage options for self-employed individuals with only one year of trading history – meaning you may have access to more mortgage options than you think!

The journey to secure a mortgage can sometimes be perceived as more challenging for the self-employed, primarily because of the way their income is assessed. Unlike those in traditional employment, self-employed people often experience variable income, which can fluctuate month-to-month or season-to-season. This variability can raise questions about income stability and reliability in the eyes of mortgage lenders.

Proving proof of a stable income in this context often requires a bit more documentation, such as business accounts or tax returns spanning multiple years.

Furthermore, the ways self-employed individuals often draw income – perhaps retaining profits within the business to foster growth, for instance – can sometimes complicate the assessment of their personal earnings and affordability.