At a time when mortgage lending rules are considerably tighter than a decade ago, it can seem almost impossible for self-employed borrowers to get the mortgages they need. Whilst it would be wrong to pretend it is easy, there are mortgages available, and this piece aims to provide some guidance.
Gather your information
As a first step towards finding your mortgage, it is a good idea to do some research to find the lenders and brokers who can best help. Totally Money has a useful site, and This Is Money gives good guidance and has a best buy list.
Do these things
Some positive actions to take which will help the process of arranging a mortgage include:
Talk to your current lender or bank
Consult a broker
Use a certified or chartered accountant to prepare tax returns and accounts
Keep your financial records up-to-date.
Don’t do these things
These actions should be avoided if you are in the market for a mortgage:
Give up – finding a mortgage will be difficult, but not impossible!
Minimise your profit / income with a view to saving tax – to get a mortgage you need evidence of strong healthy finances, not losses.
Using a broker, or financial advisor
Financial advisors or mortgage brokers can offer expertise and help to find the best mortgage for your needs. As well as a wide knowledge of what is available, they will use specialist tools, including back office systems for IFAs, such as provided by Intelliflo https://www.intelliflo.com/, to help them offer the right mortgage.
Other things to consider
Normally, you will need 2 years’ of financial records to apply for a mortgage, but some lenders will consider you if you don’t yet have those available. Again, different lenders take different positions about profits retained in the business, and how that affects mortgage decisions. Of course, you will need a healthy credit rating, for both you and your business, so take steps to check, and if necessary, repair them. The model under which you run your business – sole trader, partnership, or limited company – can affect your mortgage status. All in all, it is probably worthwhile getting the help of a specialist mortgage broker, preferably one who is used to self-employed applicants.