There is a common misconception that it is now very hard to get a mortgage in the UK if you are self-employed. It is true that self-certification mortgages are no longer available due to them being banned in 2011 after wide misuse by lenders and borrowers. These mortgages were previously very popular with self-employed people and quite easy to get, but in their absence, there are still other options on the market for self-employed borrowers.
- Have at least two years’ of company accounts
- Make sure your tax and finances are in order
- Save a significant deposit
- Be able to show a regular track record of work
- Shop around
- Get advice
Although it is possible to get a mortgage with less financial history, waiting until you have two or even three years of statements will improve your chances of an offer.
Hire a reliable accountant ahead of making your application to make sure your financial affairs are in order and up to date.
To get access to the best mortgage rates, try to save at least 20% of loan value as a deposit. Remember, self-employed people are seen as higher risk to lenders so they will want to see a larger deposit to minimise their risk. You can use our Mortgage Comparison calculator tool to compare mortgage rates and help you decide which mortgage product offers you the best overall value.
Lenders will be more favourable to self-employed workers who can prove a regular track record of work. Lenders may also want to see proof that you have future work and contracts lined up.
Some lenders will have stricter lending criteria than others. So if one lender’s requests are too much and seem unreasonable, then look elsewhere. Also, shop around for the best rate as offers can differ significantly between lenders with some are more willing to lend to self-employed people than others.
Getting a mortgage as a self-employed person is not as straightforward as getting a mortgage when you are employed. Lenders will calculate a mortgage offer differently, depending on your legal status such as whether you’re a sole trader, partnership or limited company. So it is a good idea to seek expert advice. There is plenty of free advice available to help you make an informed decision.
Visit www.propillo.com for a range of handy mortgage calculators and guides including help with getting a mortgage when you’re self-employed. Use the free online mortgage broker tool for a fast result. Don’t forget to read our guide to self-employed mortgages for more details.
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