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Self Employed Mortgages

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    Being self-employed doesn’t mean you need to miss out when it comes to mortgages. You have access to the same mortgages as everyone else but the application process is a bit more challenging. This is because lenders are mindful that your income can fluctuate.

    At Trinity Finance, we know exactly what lenders want to see for self-employed applicants and how you can improve your chances for a successful application. Our expert mortgage brokers can advise you on the paperwork you need and anticipate any issues in advance so that they are dealt with before your application is submitted. They can find the best lenders and most competitive deals tailored to your circumstances and ensure the process runs smoothly from start to finish.

    How much can you borrow?

    It’s a common misconception that lenders use the turnover, or gross profit, when assessing the mortgage affordability for self-employed applicants. This isn’t the case and the figure they use depends on whether you are a sole trader, in a partnership or a director of a limited company.

    Self-Employed Mortgages by Lawrence Chalk at Trinity Finance

    Sole trader

    As a sole trader, the amount you can borrow is based on your net profit after all deductions and expenses. This is the figure your tax is calculated on and can be a lot lower than your gross profit, making a big difference to the amount you can potentially borrow. For example, you may have a gross profit of £100,000. However, after salaries and other costs have been deducted, you may be left with a net profit of £20,000, which is the figure lenders are interested in.

    Partnership

    When you are in a partnership, lenders take your share of the profits into account. This is your share of the net profit after all deductions have been made, not the gross profit.

    Limited company

    For a limited company, lenders usually take the salary you pay yourself as a director into account as well as the dividend payments. Some lenders consider your director’s salary and the retained profit in the business rather than the dividends. If the retained profit is higher, this can increase your borrowing potential.

    Whichever category you are in, our qualified mortgage brokers, located throughout Kent, London and Edinburgh, are on hand to go over your income and outgoings to ascertain how much you can borrow. Give us a call on 01322 907 000 to discuss your situation or send an enquiry to us via our contact form and one of our mortgage specialists will reply to you as quickly as possible.

    How do you prove your income?

    Lenders differ on their requirements but generally you need to provide 2 or 3 years of certified accounts. Don’t be discouraged if you’ve only recently become self-employed, though. Some lenders will accept 1 year of accounts along with a projection. You also usually need to provide your SA302 forms for the last 2 or 3 years or a tax overview from HMRC. This confirms how much income you declared. Again, some lenders accept an SA302 form for 1 year. The downside to only having a year’s documentation is that your mortgage options may be limited.

    Generally, lenders average out your earnings over the last 2 to 3 years. When you’ve made a consistent profit each year or your profit is increasing, this adds weight to your application. However, if your income varies considerably each year, you may need to supply proof of savings or proof of potential income for the future.

    When you’re self-employed, the more paperwork you can provide, the better your chances of a successful mortgage application. There are also various ways to boost your chances of securing a better deal and our experienced mortgage brokers can guide you on how to maximise your opportunities.

    We can find the best mortgage for you as a self-employed buyer

    Just as you value your independence with being self-employed, we value the fact that we’re not tied to lenders and know you’ll be happy to benefit from that too. With access to an unrestricted range of first and second charge lenders, we have the freedom to search for the best lender suited to your case and find the optimum mortgage deal to suit your situation.

    Our specialist mortgage brokers in Kent, London and Edinburgh are highly experienced at finding mortgages for self-employed buyers. They ensure the applications are straightforward, stress-free and successful. Get in touch with us on 01322 907 000 to get the ball rolling with your new mortgage or send an email to us at info@trinityfinance.co.uk. We’re here to help you overcome any difficulties you’re concerned about and provide a tailor-made service that fully meets your needs.

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