What is a self-employed mortgage?
“A self-employed mortgage is fundamentally the same as any standard mortgage, though you’ll need to furnish considerably more proof of a consistent income. The lender must be satisfied that you can comfortably manage the monthly repayments.
You’ll be considered self-employed if you own more than 20% to 25% of a business from which you derive your primary earnings. Naturally, the better your credit rating, the more likely you are to secure the loan. If you’re a sole trader, the lender will typically average your net profit over the past two to three years. If you operate a limited company, they’ll examine your share of the net profit or the salary and dividends you pay yourself.”
Frequently Asked Questions
Most lenders require two or three years of accounts but if you have just become self-employed or have less than 2 years’ accounts, we can still help you to apply for a mortgage. If you have a qualified accountant looking after your finances, they will have all the figures you need.
The lender will take an average of your net profit over the past two to three years if you are a sole trader or look at your share of your net profit or salary and dividends you pay yourself if you have a limited company. They may take your lowest earning year as a baseline as to what you can afford to borrow if your earning vary dramatically, or some may take an annualised figure from your day rate.
You should not have to pay a higher interest rate than someone who is employed by a company but as with all mortgages, the higher the value of you deposit the better rates you will be able to access.
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