Employment situations in the UK have changed radically in the last 10 years, and the number of people starting up their own businesses has risen rapidly. It is accepted that it has always been more difficult for the person working for themselves to get a self employed mortgage, as mortgage lenders tend to give priority to those with a guaranteed income from their employer. This attitude has changed somewhat in more recent years to the advantage of the self employed person.
For some time there have been mortgage lenders who specialised in obtaining loans for the self employed, but with the rise in numbers of people working for themselves the normal mortgage broker has become quite adept at negotiating self employed mortgages.
Naturally certain things will still need to be taken into account such as, whether you are in a profession that has work on a regular basis, compared to one that that has gaps between income earnings. Consequently, if you have been in a specific industry for some time such as an electrician, this is to your advantage. You will find that different mortgage lenders have varying knowledge of respective businesses so it is in your own interest to find one that is familiar with your type of work.
If you're a new business being able to prove your income is regular could be a stumbling block, but it can help your application if you can prove ongoing contracts with an employer, that have been renewed on a continual basis. Mortgage lenders will differ on the amount of time they need for you to prove regular income.
Whilst some mortgage brokers are more understanding than others of the difficulties of proving your income, the chances are you may probably still need a fairly hefty deposit.
Given the more complex nature of trying to get a mortgage when you are self employed, it might be in your own interests to seek out the help of an experienced mortgage broker. These brokers are able to identify which is the most suitable type of mortgage to fit with your circumstances, and they have access to products that you won't necessarily see in your local branch office.
Before approaching a broker it is a good idea to have a discussion with your accountant so that you have all the relevant information about your proof of income and expenditure. This will be needed to establish your financial situation when applying for self employed mortgages.
The amount you can borrow will be dependent on your income and the value of the property you want to purchase. The majority of lenders will loan at least 75% of the value and some will even stretch to 90%.
Providing that you can prove you have a constant income and have a good credit rating it is highly likely that you will get accepted. Do not take on a mortgage which will leave you over extended for normal household running costs.
Get all your relevant documents from your accountant to establish your income. Documents such as bank statements, tax returns, audited accounts, anything that verifies your financial situation.
Self certification mortgages are generally no longer offered and the only method of getting a mortgage if you are self employed is to have at least two years of audited accounts.
Generally once you have been approved as eligible for self employed mortgages you are not restricted to a specific type and are entitled to apply for any one of the mortgage products deemed suitable for your needs.
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