Finding a mortgage deal when you’re self-employed can be tricky. As many as 71% of self-employed people said they felt discriminated against due to their employment status when applying for a mortgage, according to a recent survey by The Mortgage Lender.
Traditionally, mortgage lenders would require you to have been trading for at least three years before you could be considered for a loan. This is because it is more difficult to establish a person’s income without this information, and consequently harder to assess the level of risk involved in lending to them. However, it’s now entirely possible to find a mortgage deal, even if you’ve been self-employed for only a short period of time:
It used to be that only a select few lenders would offer loans to self-employed buyers, however, more and more lending organisations are now considering them. These range from well-known high street lenders to smaller, more niche companies. The lenders likely to accept your mortgage application will vary depending on your personal circumstances.
Many mortgage lenders will consider applicants with as little as one year’s accounts, provided that they have completed and filed a tax return for their first year’s business. However, if you’re still in your first year of trading, it may still be a good idea to apply; decisions on mortgage applications can take up to three months to complete, so applying early is an option. If you apply before the end of your first year, lenders will use your projected income to determine how much they are willing to lend you. Whilst not wholly accurate, this will give you a good idea of the amount you’re likely to be able to spend on a property.
Self-employed buyers can borrow roughly the same amount as those who are employed. This is usually around five times your annual income. There are some lenders who may be willing to increase the maximum amount available to you, but this will be dependent upon your personal circumstances and proven affordability.
Provided that the property you’re looking at is deemed to be affordable to you by the lender, you should still be able to secure a mortgage offer, even with a poor credit rating. However, you will almost certainly need a healthy deposit to put down (usually around 15%). The only issue will be if you have CCJs or mortgage arrears within the last two years, as this will severely hinder your ability to acquire funding.
If you’re self-employed and looking to secure a mortgage, we can help you find the best deals. Key Mortgage Advice have access to the whole of the mortgage market, so whatever your circumstances, your best offer is here with us! Book a free, no-obligation consultation today:
“I have recommended KMA to all my friends and if you’re buying a house or remortgaging I would look no further – the team are friendly, helpful people who have your best interests at heart every step of the way.”
“Sharon and her team have been a great help while trying to buy my first property. They talked me through the process step by step and sent me weekly updates on the progress of my purchase. I am confident that I have a great deal on my mortgage.”
“I cannot thank the team at Key Mortgage Advice enough. They provided an excellent service and were able to arrange our mortgage within a very tight, three week deadline. I would highly recommend them.”
“After a chat about my goals, Sharon put forward my case to a number of lenders and within a couple of days a local business manager from Barclays offered to support my application. I cannot fault the team at KMA, I have used and recommended them for nearly 10 years now and they are always my first choice.”
“Our clients ask us for advice on mortgages for both domestic and commercial premises and we have no hesitation in recommending them to Key Mortgage Advice. The team has a breadth of knowledge which they skilfully impart to our client base, who are always happy with the advice they receive.”