In the years preceding the credit crunch, self-employed people and directors were able to self-certify their income. This meant that mortgages for these people were often dubbed ‘liar loans’ because there was little in the ways of checks which validated a person’s income. Although it is not impossible to obtain a mortgage for company directors, it can be a bit more complicated.
Ascot Mortgage Expert
The reasons for this are various; company directors usually take a lower salary and restrict their dividend payments, which can be useful for tax purposes, but not so good when it comes to a mortgage application. This is because lenders need to be able to access an applicant’s ability to pay back the loan- the mortgage – and this can only be accurately done based on an affordability assessment.
In the pre-crash years, mortgages were often calculated based on a salary and multiples of it, whereas now lenders like to see what other financial commitments people have, and therefore what they can realistically afford to pay on their mortgage. For first time buyers, who perhaps may have been renting, then there is also little in the way of substantial lending history for lenders to consider.
The problem for company directors is that the mortgage is often accessed on income, which ignores the profits that the business makes. It also often ignores dividend payments. Some lenders, however, are starting to access this, and are beginning to include profit along with income. This is a much more accurate reflection; if a business is doing well, then there is a higher chance that the company director might pay themselves a higher salary. Likewise, if the business is not doing so well, then there may be a cause for concern with the salary.
Aside from the logistics of calculating the amount, the same rules apply to company directors as with a self-employed person. Like self-employed people, directors will need to provide about three years of company records, to show the accounts of the business, and some lenders also want to see forecasts of future trading. A good credit history and healthy deposit are also important.
These rules aren’t particularly different for first time buyers, but it is important to make sure that you do everything that you help you get a mortgage, even if you were employed. Comprehensive records of the business, and a credit history of your own are essential. Being a first time buyer who is also a director does not exclude you from home ownership, but it just means that you need to be prepared to meet the criteria and also shop around for the best deal, or a broker who can match your needs to the best lender.
Discover How Remortgaging Can Secure Your Financial Success and Home Upgrades
living in your present property while applying for another mortgage deal with a new lender. Before finding out how to remortgage and get the best offers from experts like Ascot Mortgages, you have to check meeting what parameters of the deal that can help you succeed the most. The range of background factors varies a lot — from the recently changed loan-to-value ratio or your existing agreement coming to an end.
Whether you are trying to get a more beneficial deal or searching for funding to improve your home conditions, remortgaging is one of the most advantageous scenarios to consider.
A guarantor mortgage is a type of mortgage that involves a third party, usually a family member or close relative, guaranteeing the mortgage repayments on behalf of the borrower. This arrangement is more commonly now known as joint borrower sole proprietor as the guarantor essentially is included as part of the mortgage application but not included on the title deeds to the property.
Shared ownership is a form of home ownership that enables buyers to purchase a share in the property and pay rent on the remaining amount. The buyer usually pays an initial deposit, which is between 5% to 10% of the price of the share being purchased, and then pays a reduced rent on the remaining portion owned by a housing association or other organisation.
A joint mortgage is a type of mortgage that two or more individuals take out together to purchase a property. It allows multiple borrowers to combine their incomes and share the responsibility of repaying the mortgage loan.
The loan-to-value ratio (LTV) is a financial term that represents the ratio between the loan amount and the appraised value or purchase price of an asset, typically a property. It is commonly used by lenders to assess the risk associated with a loan.
Repayment and interest-only mortgages are two different types of mortgage repayment structures. Here’s an explanation of each:
With an interest-only mortgage, you are required to have a separate plan or investment vehicle in place to repay the principal amount at the end of the mortgage term for residential mortgages. This could involve savings, investments, or other arrangements that aim to accumulate sufficient funds to pay off the loan. It’s crucial to ensure that the repayment plan is robust and will be able to cover the loan amount. For Buy to Let mortgages lenders will typically accept sale of the security property as the investment vehicle.
Consider a longer-term mortgage if:
Opt for a shorter-term mortgage if:
Consulting a mortgage advisor can provide personalized guidance.
Yes, it is possible to get a buy-to-let mortgage as a first-time buyer, but it can be more challenging. As a first-time buyer lenders may view you as a higher risk and will also base their lending decision on both rental income and your own personal affordability. However, if you have a good credit score, a stable income, and a solid business plan for your rental property, you may be able to secure a buy-to-let mortgage. It’s important to shop around and compare different lenders to find the best deal for your individual circumstances which is why contacting a mortgage broker for the right advice is a good solution.
Yes, you can get a first-time buyer mortgage if you’re self-employed but most lenders would require a 2 year minimum trading history. However, additional requirements may apply. You’ll need to provide evidence of income, such as business accounts and tax returns. Lenders may request an accountant’s certificate and consider your trading history. A larger deposit may be required. Specialist lenders may cater specifically to self-employed borrowers. It’s best to consult with a mortgage advisor or lenders directly for personalized guidance.
Apply for a first-time buyer mortgage when you have prepared your finances, saved for a deposit, and are ready to commit to homeownership. Consider obtaining a Decision in Principle before house hunting. Consult with a mortgage advisor for personalized guidance.
When budgeting for homeownership, consider the following costs: –
Ensure you research and estimate these costs to create an accurate budget. Our advisors are always available to assist you in finding the most suitable deal for your unique situation.
Searching for your first-time home? Ascot Mortgages is your go-to resource! Our experts specialize in assisting first-time buyers and have access to a diverse range of mortgage options. Whether you’re looking for a cozy apartment or a spacious house, we’ll find the perfect financing solution for you. Contact Ascot Mortgages today to discuss your first-time buyer requirements and embark on the exciting journey of homeownership.