Mortgages for Self Employed People

Yes, self-employed individuals can get a mortgage, but the application process may be more detailed compared to traditional employment. Lenders typically look for proof of stable income and a reliable track record of business activity.

What do lenders look for when considering a self-employed mortgage application?

Lenders want to see:

• Proof of income: Most require at least 2-3 years of financial records, such as tax returns, bank statements, and profit and loss accounts.
• Stable business history: A consistent income over time demonstrates financial stability.
• Credit score: Your credit history and score are evaluated to assess your risk as a borrower.

You can prove your income through:

• Tax returns and self-assessment: Showing your total earnings and expenses.
• Bank statements: Demonstrating the flow of money into your account.
• Profit and loss statements: Often prepared by an accountant for a clear picture of your earnings.
• Audited accounts: Lenders prefer accounts certified by a professional accountant.

While self-employed borrowers may not necessarily need a larger deposit, some lenders may require a higher deposit due to perceived risk. This can vary based on your financial profile and lender policies.

Yes, it’s possible, but more challenging. Some lenders may consider you if you have been self-employed for at least 1 year and can show consistent income through contracts or substantial business profits. A larger deposit and strong credit score can also help.

Self-employed individuals can apply for various mortgage types, including:

• Fixed-rate mortgages: Stable interest rates for a set period.
• Tracker mortgages: Rates that follow the Bank of England base rate.
• Variable-rate mortgages: Interest rates that can change over time.

To improve your chances, consider:

• Keeping your financial records organized: Ensure your tax returns and bank statements are up-to-date.
• Building a good credit score: A higher credit score can make you a more attractive borrower.
• Working with an experienced mortgage adviser: A broker can help you find lenders that are flexible with self-employed applicants.

Yes, some lenders are more experienced in working with self-employed borrowers and may have more flexible criteria. An experienced mortgage broker like Mellow can help you find these lenders and guide you through the process.

Interest rates for self-employed borrowers may be slightly higher due to the perceived risk. However, this depends on your financial profile, credit score, and lender policies. Comparing rates and working with a mortgage adviser can help you secure the best deal.

Yes, mortgage brokers are valuable for self-employed borrowers. They understand the complexities of self-employed income and can guide you to lenders that are more open to non-traditional applications. Brokers can also help you gather the right documentation and present your case effectively to lenders.