Getting a mortgage deal can be more challenging if you’re self-employed, but it isn’t impossible.
In this article, we’ll look into the ins and outs of securing a mortgage as a self-employed applicant, how to find a good deal, and what you can expect from the application process.
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Can you get a mortgage if you’re self-employed?
There aren’t any specific mortgage products for self-employed people – but you can still secure a regular mortgage deal if you’re your own boss.
Freelancers and those who run their own businesses will need to apply for the same mortgage that someone in salaried employment would get. The only difference is that you will need to provide more evidence that you have a reliable income.
What will I need to provide?
Every mortgage application requires the following documents:
- A passport or driving license to prove your identity
- Recent utility bills to prove your address
- Bank statements from the previous three to six months
- Evidence of deposit money (if not recorded on bank statements)
Unlike salaried employees, lenders can’t see what your income will be in the future, they check your income history. Therefore, there are additional requirements for self-employed home buyers, such as:
- Two or more years of certified accounts
- SA302 forms or a tax year overview from HMRC covering the last two to three years.
Contractors may also need to show evidence that they have upcoming contracts and company directors may need to provide proof of retained profits.
Related: Buying a property on your own: How to make it possible
Will I have to pay higher mortgage rates?
As long as you can provide proof of your income and your lender is confident that you can afford to keep up with monthly repayments, you should qualify for the same mortgage rates as a full-time, salaried employee.
Can I improve my chances of securing a mortgage?
There are a few ways you can improve your chances of getting approved for a good deal. These include:
Have your SA302 forms ready
When you file your tax return, a SA302 form is created by the HMRC to prove your income tax calculation for that year and the earnings you submitted. Lenders will request to see this form as proof of your income from self-employment.
You can print your SA302 forms from your HMRC online account if you filed your tax return online. If you have sent your tax return via post, you will have to contact HMRC, and they can get the forms posted to you. This can take up to two weeks, so make sure you have your forms ready before you apply for a mortgage to prevent any hold-ups.
Related: Top tips for planning your finances before you move
Improve your credit score
A healthy credit score is essential if you want to get the best possible mortgage deal.
Before applying, make sure to check your credit score. It is free to look at and it will flag up any areas for improvement. This could include getting on the electoral roll or closing old credit accounts. A few minor adjustments could be all it takes to improve your chances of getting approved.
Save up a larger deposit
You should save up the largest deposit possible before applying for a mortgage. This could open up a wider range of mortgage deals for you to choose from and therefore could improve your chances of finding the right one.
Speak to a mortgage adviser
If you need help finding a mortgage deal, speaking with an expert mortgage adviser can set you on the right track.
Mortgage advisers have in-depth knowledge of the market and access to a wide range of lenders, including those that may not be available to you directly. They can review your application to identify any issues and provide tailored advice to improve your chances of approval.
By leveraging their expertise, brokers can often find alternative mortgage products that better suit your financial situation and guide you through the necessary adjustments to your application. Their personalised service can significantly improve your chances of securing a mortgage, which is invaluable help if you are self-employed.
Ready to move to a new home? Contact your local Whitegates branch today.
