Self-Employed Mortgages

How much deposit do I need?

The deposit required for a self-employed mortgage is similar to that for other mortgage applicants. A typical deposit is around 5% to 20% of the property’s purchase price. However, offering a larger deposit can be advantageous. Not only does it reduce your loan-to-value (LTV) ratio, but it can also make you more appealing to lenders.

How will I be assessed as a self-employed mortgage applicant?

Mortgage lenders assess self-employed applicants differently from those with traditional employment. Here are the key factors they consider:

1. Income: Lenders will analyse your income to determine if it’s stable and sufficient to cover mortgage repayments. They may request tax returns, business accounts, or SA302 forms as evidence.
2. Accounts History: Lenders often require two to three years of financial accounts to assess your income stability. If your income has been consistent or growing during this period, it can work in your favor.
3. Credit Score: A good credit history is essential for mortgage approval. Lenders will check your credit report to assess your financial responsibility.
4. Deposit: The size of your deposit can affect the interest rates and deals available to you. A larger deposit can improve your borrowing options.
5. Affordability: Lenders will evaluate your monthly expenses to ensure you can comfortably afford the mortgage payments.

What will I need to apply for a mortgage if I’m self-employed?

When applying for a self-employed mortgage, you’ll need to provide the following documentation:

1. Proof of Income: This includes your tax returns, business accounts, SA302 forms, and bank statements.
2. ID and Address Verification: Lenders will require proof of your identity and address, such as a passport and utility bills.
3. Credit Report: Ensure your credit report is in good shape and provide it to the lender for assessment.
4. Business Accounts: If you operate through a limited company, you’ll need to provide your company accounts and potential details of any other directors.
5. Personal Tax Returns: Self-assessment tax returns are a common requirement for self-employed mortgage applicants.
6. Proof of Deposit: You’ll need to demonstrate the source of your deposit funds, which should be consistent with your financial records.
7. Additional Documentation: Depending on your circumstances, lenders may request additional documentation to assess your financial stability.

Securing a self-employed mortgage is possible, but it requires careful planning, documentation, and often the assistance of a specialist mortgage broker. Understanding the criteria, preparing your financial records, and improving your credit score can all increase your chances of success. If you’re self-employed and dreaming of homeownership, don’t let the process overwhelm you. With the right approach and professional guidance, you can achieve your goal of owning your own home.

If you have any questions or need assistance with your self-employed mortgage application, feel free to reach out to Ascot Mortgages at 01925 711558 or [email protected]. Our team of experts is here to help you every step of the way.

Alison Gibson is a seasoned mortgage expert at Ascot Mortgages, specialising in providing bespoke mortgage advice to professionals across the UK. To find your match and start your journey towards your ideal mortgage, you can reach out to us directly at 01925 711558 or send an enquiry through our website.