It may be easier than you think to get a mortgage if you’re self-employed

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Although rules about getting a mortgage for self-employed people are tougher than in the past, the Financial Conduct Authority has stated that this has not put the self-employed off applying for mortgages.

Many lenders want to see the self-employment trading history for the last three years or more, but some lenders are now considering self-employed borrowers who have been trading for just one year. Accounts must be certified by an accountant, with second-year income projections provided. The only drawback is that the interest rate on these mortgages will be higher than the standard rate to reflect the extra risk that the lender is taking.

Lenders will consider all types of businesses, including sole traders and partnerships. Directors of limited companies can also apply with their income based on both salary and dividend payments.

An insurance broker can help you find the best mortgage deals for the self-employed. It is also wise to take out income protection insurance, which can provide a monthly income if you are unable to work due to sickness or an accident. This provides the peace of mind of knowing that you can continue to pay the mortgage payments if you cannot earn an income.

With the need to provide accounts and show evidence of how much tax has been paid, there is more paperwork involved in applying for a self-employed mortgage. Nonetheless, this has not stopped thousands of self-employed people obtaining a mortgage to buy their homes.

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