If you work for yourself, you are deemed self-employed, meaning you will require a self-employed mortgage. You may have wondered how this affects getting a mortgage, whether you can get one, and how to go about it.
In this article, we’ve answered some common myths and provided tips to hopefully help the self-employed on their mortgage journey.
What is a self-employed mortgage?
A self-employed mortgage is simply a mortgage taken out by someone who is self-employed.
Self-employed Vs Employed
When it comes to being eligible for a mortgage, not much changes between being self-employed and being employed.
A self-employed applicant will be treated the same as an employed applicant in terms of credit criteria, age requirements, and maximum loan amounts, but different income documentation will be required.
What income documents will I need?
f you are employed, most lenders will require 1-3 months’ worth of payslips, whereas for the self-employed, they will require 2-3 years’ worth of accounts, specifically your SA302s and tax overviews.
Can I get a self-employed mortgage with 1 year’s accounts?
A common myth in the UK is that the self-employed are unable to get a mortgage if they have only 1 year’s worth of accounts, but this is not true.
Although it may be limited to who can offer a self-employed mortgage with only 1 year’s accounts, lenders such as Kensington Mortgages cater to this type of client.
What lender will give me a mortgage if I’m self-employed?
Most high-street lenders, building societies, and specialist lenders will accept self-employed applicants, but they all have different criteria.
Some lenders may require 2 years’ worth of accounts, some may require 1, and some may want your accounts to be verified by an accountant, while others won’t.
Do I need more of a deposit?
No, most lenders will not require a higher deposit if you are self-employed. However, if you have defaults, CCJs, payday loans, or excessive missed payments, you may need to go to a specialist lender, who could require a 15-25% deposit.
How do I get a self-employed mortgage?
The majority of high-street lenders, building societies and specialist lenders offer mortgages to self-employed people, so it shouldn’t be in issue to get one.
To make sure you find the best rate available to you, it is always recommendable to speak to a mortgage adviser.
Discover more from Mortgage Guide
Subscribe to get the latest posts sent to your email.
