Documents for a Self-Employed Mortgage – what to have ready
We often hear that it is harder to get a mortgage for the Self-Employed, but in reality that’s not usually the case. As long as your business is healthy you should get a competitive deal. The only hurdle is in confirming your income, which might take a little more effort than it would for an employed person.
What is a Self-Employed Mortgage?
There are no mortgage products on the market specifically for the Self-Employed – you will apply for the same standard mortgages as anyone else. The only difference is how positive the lender is towards Self-Employed applications, and the process for proving your income. With a standard employed mortgage application, you simply state your salary and provide payslips to confirm the details. The challenge for the Self-Employed is that your income is variable, which some lenders think makes you a more risky customer. For reassurance, mortgage lenders seek more information about your earnings, usually looking for a track record over 2 to 3 years and assessing this. What documents do you need for a Self-Employed Mortgage? There’s no definitive list of required documents – what you need to supply can differ by lender. You will, however, always need proof of identity. Typical ID is a UK photocard driving licence or passport, together with proof of address from recent bank statements or utility bills. These are the documents you should gather ready for your mortgage application:
- One to three years’ tax records e.g. Self assessment tax returns (SA302 forms) and tax year overviews
- Certified accounts for the last one to three years
- P60 forms
The proof of income needed can vary according to the type of business. Sole traders – usually your tax forms will be sufficient. The lender will take the total income from the forms and calculate an average annual figure. Partnerships – Often your income is taken from your self assessment, but some lenders might also look at your share of retained profit in the business. Limited Company: You will need certified accounts for the last one to three years. Each year’s accounts should state your salary. If not, you might need to supply P60 forms or tax calculations. Again, some lenders will also look at profit that you have kept in the business, which may mean you can borrow more. Lenders will also check your credit score. Having a good credit rating shows that you’ve been responsible with past financial activity – paying loans and credit card bills on time and staying within borrowing limits. This is reassuring to a lender.
How do you improve your chances of being accepted by a lender?
Mortgage providers are seeking confidence that you can comfortably afford to pay back the mortgage. They will want evidence that your business gives you a steady income and is growing. Here are some ways to improve your chances of being accepted:
- Use a mortgage calculator to get an idea of how much your repayments will be and how to make them as affordable as possible
- Wait until you have at least two years of certified accounts as this dramatically increases the number of lenders available to you
- Provide evidence of new contracts to support any negative factors in recent activity
- Save up a decent deposit – more than 10% makes it easy for a lender to accept you and give you better rates.
How can a Mortgage Broker help you with your documents if you are Self-Employed?
We’ve helped hundreds of Self-Employed people find suitable mortgages. By getting to know you we seek out the lenders most likely to accept your specific financial situation. Our advisors know which documents each lender will require and what they are looking for and can guide you to the most appropriate solution. We’re registered in England and authorised and regulated by the Financial Conduct Authority, so you can be confident in our advice and support.