What Are The Requirements for a Self Employed Mortgage?

Being self-employed can come with its own set of unique challenges, and one of those challenges can be finding the right mortgage.While traditional lenders tend to favour borrowers with a steady, salaried income, there are many mortgage options available for self-employed individuals.

Tips for Self-Employed Individuals to Improve Mortgage Chances:

1. Speak to a mortgage broker to find the best lender for your situation
2. Check your credit file for any adverse entries and ensure you’re on the electoral roll
3. Keep your accounts up to date and consider getting an accountant to prepare them
4. Avoid payday loans and minimize credit checks for other applications
5. Keep credit card usage low and avoid making just minimum payments
6. Sort out your deposit early and consider speaking to your accountant if using business funds
7. Get your documents in order and obtain an agreement in principle from a lender

By following these tips, self-employed individuals can improve their chances of getting approved for a mortgage. A mortgage broker with experience in self-employed mortgages can also help navigate the process and match you with the most suitable lender. Additionally, having an impeccable credit record, and providing business accounts that have been drawn up or approved by a chartered certified accountant can help achieving the most competitive rates.

Documents needed for self-employed mortgage application:

• Valid photographic ID, such as a driver’s license with current address
• Proof of address, such as a council tax bill, utility bill, or financial statement
• If also employed, 3-6 months’ worth of payslips and P60s, and evidence of any additional income such as bonuses or commission
• For limited company directors, 2 years’ worth of fully signed-off accounts by a qualified Chartered Certified Accountant
• 3 years’ worth of SA302s and a tax overview from HMRC for personal tax returns
• For contractors, 12 months of contracts fully signed by all parties, showing day-rate and paid in sterling
• For CIS or Umbrella contractors/workers, 6 months’ worth of payslips
• 3 months of salary fed bank statements, 3 months of business bank statements, and 3 months of bank statements showing rental payments
• Statement showing funds held and build-up of funds for deposit, and statement letter from family member if funds are gifted
• Tenancy Agreement and 3 months of bank statements for any background buy-to-let properties as a source of income
• Evidence of life insurance or other protection to cover the mortgage, such as a copy of the policy summary.

It’s important to note that self-employed individuals may have to provide more documentation and may have to pay a higher interest rate than salaried employees. However, with the right documentation and a strong credit score, self-employed individuals can still secure a mortgage.It is advisable to consult with a mortgage broker who has experience working with self-employed individuals. They can help you navigate the different options and find the best mortgage for your uniqueIf you need help finding the right mortgage lender for your situation then please feel free to contact us today!