It’s no secret that it’s more difficult to get a mortgage if you are self-employed, but with the right preparation, it can be done.
According to a February 2017 WhatMortgage.co.uk article, one in eight mortgage applications from self-employed people are turned down. To increase the chances of a mortgage offer, WhatMortgage.co.uk urges self-employed people to get advice about the criteria a lender requires to approve a mortgage application.
It used to be that lenders required two or more years’ accounts in order to assess whether the applicant could afford the mortgage repayments. This made it difficult for new business owners to find a mortgage. A few lenders will now consider an application with just one year’s trading accounts.
As long as the accounts are up to date and the business is making a good profit that will easily cover the mortgage repayments, an application has a good chance of being approved.
Borrowers need to have a healthy credit rating for personal spending, as well as the financial management of the business.
The proposal in the Spring Budget to increase national insurance contributions for the self-employed would have reduced their income and affected the maximum amount that the self-employed could borrow. To the relief of many self-employed workers, though, Chancellor Philip Hammond has cancelled this increase.
There are a number of lenders who specialise in providing self-employed mortgages. A mortgage broker can provide advice for self-employed people needing a mortgage, and they will be able to arrange the best mortgage deal.