A mainstream lender will want to see three years audited accounts from a certified or chartered accountant before they consider a mortgage for the self-employed.
The age old problem for the self employed is that the accountants job is to show that you earn as little as possible thereby reducing your tax bill. But this could come back to haunt you, when applying for a mortgage as it doesn’t look like you earn very much!
Should you not have three years accounts, you may be able to get a self-certification mortgage by declaring your income, providing a certificate from your accountant, your last few years mortgage statements etc, though you are still not guaranteed a mortgage.
Recently, however, some specialist lenders have targeted the self-employment mortgage market by providing some innovative solutions that offer a more flexible approach to match the working pattern of someone who is self-employed.
This means that they accept that when you are self-employed you may enjoy periods of high income and you may suffer from periods of low income. Ideally, your mortgage should reflect that, enabling you to overpay and underpay when you need, and not be so rigid when assessing your application.
Mainstream lenders actually used to be more accommodating, they offered self-certification loans and non-status loans where your financial status wasn't confirmed by an employer. But they rarely do this now, and their lending criteria has stiffened.
To have the best chance of getting a mortgage you will need to show an upturn income every year and possibly business plans for the future. You will also need to provide a large deposit, as you are likely to be lent only up to 75% of the value of your home if you cannot prove your income.
You should look out for the specialist lenders who don't penalise you for your lack of status, trust your accountant, and might offer you up to 95% of the value of your home.
If you would like to speak to a mortgage adviser who has specialist knowledge of the self employed market, please complete the relevant enquiry form. Please note at MortgageMap.co.uk we do not arrange mortgages or give advice we merely put you in touch with our UK network of mortgage advisers.
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SELF EMPLOYED LENDING CRITERIA