Getting on the property ladder
Dom Beer and Chris Beer
For those who are self-employed, securing a mortgage isn’t quite as simple as for those who are in full-time employment. This is due to the fact that most self-employed workers receive far less predictable incomes than salaried workers.
Although it can be trickier to secure a mortgage as a self-employed worker, with certain preparations you will be able to provide the reassurance to mortgage lenders that shows you can meet monthly payments.
Before making your application, it is essential that you have made all the necessary arrangements as a failed attempt can harm your credit score, reducing your chances for any future mortgage applications. At Beerstone, we are able to offer tailored self-employed mortgage advice to Devon, and the surrounding counties, in order to ensure you get the best deal for your mortgage.
The truth behind self-employed mortgages
Although the term ‘self-employed mortgage’ gets thrown around a lot, there isn’t actually a special sort of mortgage just for those who are self-employed.
The same types of mortgages are available to both self-employed and employed applicants; however, due to your situation you may have less deals to choose from, while also needing to go through more rigorous checks.
Tips for the self employed on securing a mortgage
There are a range of ways to help increase your chances of getting a mortgage if you are a self-employed worker, while also increasing your chances of getting a better deal. Take a look below at some tips for mortgages for self-employed workers. If you are still looking for additional self-employed mortgage advice in Devon then our friendly and helpful team will be on hand to answer your questions.
1) Can a spouse take the lead on a mortgage?
If you are self-employed and your spouse is salaried then it may be worthwhile having their first name on the mortgage. If your spouse has a steady income, even if it is not as much as your self-employed income, it could increase the chance of a successful application.
Each case will vary so it is important to speak with our advisors for unbiased and helpful self-employed mortgage advice for Devon. We will be able to tailor our advice to your specific situation in order to get you the best deal.
2) Prepare a minimum of two years of accounts
Lenders want to have the reassurance that you will financially be able to make repayments; therefore, it is vital that you are able to show two years of recent accounts as a minimum to lenders. The most recent records must not exceed being over 18 months old.
Many self-employed workers assemble their records themselves; however, we would advise hiring an accountant to ensure your accounts meet lender expectations. They will also be able to offer you guidance in representing yourself in the best light if questioned.
Lenders will either want to see your accounts, an SA302 form (a confirmation to HMRC on your reported income), or both. It is best to be prepared so you may want to send off for documentation prior to the application so that the documents turn up promptly.
3) Increase your income if possible
We appreciate that many self-employed workers try and keep as much of the profit within the business in order to grow the business further; however, when applying for a mortgage it is generally best to make sure that you are able to receive regular dividends and pay in order to show that your company can provide a sustainable income to yourself.
The payments can also be used to help build a larger deposit for when it comes time to buy your property.
Once you have secured your mortgage you can return to retaining profits within your business, as long as you continue to maintain mortgage payments and other expenses. If you have any questions, our team of advisors will be able to provide expert self-employed mortgage advice for Devon and the surrounding counties.
4) Delay any dramatic changes to your business
Stability is key for any mortgage, so if you start making large structural changes to your business then you can reduce the chance of being able to secure a mortgage; therefore, if you were looking to go from being a sole trader to a partnership or limited company, it is best to hold off for a while.
Alternatively, if the business changes are essential then it may be worth delaying the mortgage application to give time for the lender to have more confidence in your situation.
5) Check your deposit on the deposit bands
This applies to both self-employed and salaried workers. By having a larger deposit, it offers the chance to exceed the different deposit bands, which can bring down mortgage rates even further. If you reach the different increments (generally 10, 25, and 40 percent deposits) you will see better rates.
If you are just marginally off one of those bands it may be worthwhile looking to raise the extra funds beforehand to get the better rates.
6) Criteria differs from lender to lender
Sometimes you can find that one lender that would happily provide you with the mortgage you desire, whereas another may give an emphatical ‘no’. This is because they will view your earnings in a different way from one another.
For example, some lenders may prefer to see a better level of salary or dividends, whereas another lender may have a preference for good levels of profit and retained profits.
When it comes to preventing rejected applications that can affect your credit score, it is vital you receive self-employed mortgage advice for Devon. Our team of experience advisors will be able to ensure you are in the most favourable position before making any application.
7) Speak with a mortgage advisor
A mortgage advisor will be able to look at the ins and outs of your circumstances to find mortgages that suit your specific needs.
A specialist will be able to look for lenders who are more likely to offer mortgages to self-employed workers, which can minimise the chance of a failed application. One failed application will do minimal damage to your credit score, but an array of failed applications can quickly make future applications far more difficult.
Applying for your mortgage
Ready to apply for your mortgage? We are specialists in self-employed mortgage advice for Devon, and the entire South West.
Whether you are self-employed, a first-time buyer, moving home or looking to remortgage, our team is ready to help the process easier.
If you are looking to start your mortgage journey today, why not give us a call and speak to our friendly mortgage advisors who will be able to offer you professional and helpful advice.
We can also help with:
Ready to get started?
Speak to our mortgage advisors today to get started with the process of buying your home while self-employed.
Over the years, our mortgage advisors have helped hundreds of customers across Devon in areas such as Ottery St Mary, Exmouth, Exeter, Newton Abbot, Sidmouth, Honiton and Crediton to name but a few.
Your home/property may be repossessed if you do not keep up repayments on your mortgage.
About Beerstone
Beerstone Financial Services was established in 1996 by Chris Beer, our Founding Director, who still plays a key role in the company and ensures we maintain the best service.
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Beerstone Financial Services was established in 1996 by Chris Beer, our Director, who still oversees the company and ensures we maintain the best service.
In total we have over 30 years of experience in financial services working in a range of environments so you can be sure that your situation is in experienced hands.
Speak to our team
Visit our offices: 2 Southernhay West, Exeter, EX1 1JG
Beerstone Financial Services Ltd (542704) is an Appointed Representative of BrokerSync Ltd, which is authorised and regulated by the Financial Conduct Authority (1031981).
There may be a fee for Mortgage Advice. The precise amount will depend upon your circumstances and will be agreed upon following your initial meeting.
Investments, Pensions, Wills, Trusts, PMI and Estate Planning will be referred to our authorised third-party providers. Beerstone Financial Services Ltd and BrokerSync Ltd are not responsible for any advice received from the third-party providers.
Investments, Pensions, Wills, Trusts, PMI and Estate Planning will be referred to our authorised third-party providers. ABC Ltd and BrokerSync Ltd are not responsible for any advice received from the third-party providers.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Conveyancing, Wills, and some forms of Buy-to-let Mortgages and Commercial Mortgages are not regulated by the Financial Conduct Authority.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or other debt secured against it.'