- Salli Anstey
Since 2009, the percentage of UK self-employed workers has risen from 7% to 15%. Showing up in different forms, as a self-employed worker, you may run your own company or are in a profession where you are classed as such, for example, a contractor, freelancer, independent consultant, musician or artist.
Many self-employed professionals worry that their employment status will limit their borrowing options and affect their success in obtaining a mortgage. In reality, however, it’s just about being able to evidence things slightly differently so that lenders can confidently carry out the affordability checks. The good news is, in recognition of this growing and previously under-served section of the workforce, and alongside a low bank borrowing rate, more and more lenders are making it much easier. So, if you ARE in this situation, there may be much more choice than you think.
At Private Wealth Mortgages, we have access to an extensive range of mortgage lenders and our expert advisors look at your particular circumstances and future goals to be able to match you with the right products and lenders. What’s more, we offer a FREE no-obligation initial consultation to assess your personal and financial situation in order to understand your needs.
In the meantime, whether you’re self-employed and looking to obtain your first mortgage or you need to remortgage, there’s steps you can take to increase your chances of being accepted:
SAVE A LARGE DEPOSIT: Having as large a deposit as possible puts you in a better position in terms of the rates that will then be available to you. This is especially important if you don’t have a long history of accounts.
KNOW YOUR FINANCES: Keep and pull together comprehensive records of all your business and personal accounts to make it as easy as possible for lenders to access your financial position and prove your income. Some lenders need up to 3 years’ worth of financial records but there are options if you have just 1 years’ figures. Understand your money inside and outside of your business demonstrating that you know what’s going on.
HIRE AN ACCOUNTANT: Getting help from an accountant can help you structure your income and accounts to reflect your ability to afford the mortgage you want. A few lenders may even require you to have a qualified accountant to prepare your financial information.
SPEAK TO A MORTGAGE ADVISOR: Mortgage amounts can vary depending on what figures the lender looks at, so it’s important to speak to one our specialist advisors who have knowledge of self-employed mortgages to work out the best lender for you. Some mortgage lenders, for example, will use net profit of a company plus salary, others will work on just dividends.
EVIDENCE WORKFLOW: Being able to show that you have a healthy stream of work planned, e.g. scheduled jobs, will benefit you as this helps to prove your future incomings.
ENSURE YOU HAVE A GOOD CREDIT SCORE: Probably something you’ve heard before, but a good credit history is important when obtaining a mortgage or remortgaging, so it’s worth giving your finances a spring clean. Paying off debts as soon as they’re due, closing unused accounts and making sure you’re on the electoral role are just some of the ways to boost your rating.
At the end of the day, being self-employed doesn’t stop you from getting a mortgage. It just means that you must be a little more thorough in evidencing your finances. At Private Wealth Mortgages, we’re able to access the whole-of-market to match the best lenders to your situation, and we guide you on what’s needed along the way. Give us a call today on 01403 270 006 or email: info@privatewealthmortgages.co.uk.