Can I Get a Mortgage If I’m Self-employed? Yes Indeed!

So, you’re a self-employed whiz, rocking a work-life balance, and ready to make a move or take the plunge into home ownership. Alongside the usual financial considerations and affordability stress-testing, self-employed individuals face some additional twists and turns on the road to mortgage approval...

Income

Income is the bread and butter of mortgage applications. For self-employed folks, lenders typically take an average of income earned over the previous 2-3 years. Without payslips, you’ll need to show off your financial prowess by providing tax returns and bank statements to verify income. And remember, lenders love stability like plants love water. So if your income has been doing the cha-cha-cha, you might need to smooth things out before you waltz into that mortgage office.

Tax efficiency

As a savvy entrepreneur, you’ve probably mastered the art of tax efficiency. When it comes to mortgages, you’ll need to find that sweet spot between tax efficiency and demonstrating sufficient income.

Limited Company versus Sole Trader

Are you a director with your own limited company? No problem. Ltd company directors may just need to bust out additional documents such as company accounts and proof of dividends to demonstrate your income. Some lenders see a move from a sole trader to limited company as continuous business activity, so if you’re starting out small and success means you need to shift gears, you won’t necessarily stall your house buying dreams!  

Deposit

Now, about your deposit. As a self-employed superstar, you may face higher deposit requirements compared to salaried employees. Lenders may want 10% of more depending on how long you’ve been trading for.

Lender criteria

Lenders are like snowflakes, no two are exactly the same! Each have different rules and preferences for self-employed individuals. Some may be more lenient when it comes to assessing your income; while others may want every financial document you’ve touched since birth (or thereabouts). Think of it like mortgage match-maker; with a bit of luck and a lot of solid preparation, you’ll find a perfect match in no time.

Getting a mortgage as a self-employed warrior may be a bit tricker, but, hopefully we’ve helped sprinkle a little know-how on your journey to homeownership!