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Your Guide To Getting a Mortgage if You’re Self-Employed

By zincdigital9,

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For those who are self-employed, the idea of applying for a mortgage might feel more complicated than it is for others. We know that traditionally, mortgage lenders typically base their lending decisions on stable employment and consistent income streams, which aren’t always the case for self-employed individuals. However, with the right knowledge and preparation, as well as a good mortgage broker like Allegro Mortgages on your side, securing a self-employed mortgage can be made simple. 


Not every self-employed person is the same, and the type of job you have is the first thing that we’ll need to know to advise you properly. 


Sole Traders

As a sole trader looking for a mortgage, lenders typically assess your tax calculations for the past two years. There are a lot of potential variations to this rule, however. If you’re on an upward trend, a reference from your accountant and some recent bank statements can be taken into account to the affordability. If you’re a new business, some lenders will still accept you as long as you’ve been operating for a year and have previous experience in the same industry. If you’ve got questions, speak to Allegro Mortgages. 


Limited Company Directors 

For directors of limited companies, lenders look at two years of history from the business, evaluating salary and dividends drawn. Some lenders will also look into the retained profits in the business, which can provide some extra flexibility within affordability checks. 


CIS Contractors

A mortgage application for a CIS contractor can present additional questions. Whilst most lenders treat CIS contractors as self-employed, requiring two years of tax returns, there are some lenders who understand the unique circumstances and look at things differently. These lenders may require three to twelve months of wage slips, which can be used to ascertain yearly gross income.    


Day-Rate Contractors 

Historically, getting a mortgage as a day rate contractor was a difficult job, however the industry is developing a fairer way to assess affordability. They now use an equation that multiplies your day rate by 5 working days, and assumes a 46 week working year. This has made a great impact and helped a lot of day-rate contractors gain a mortgage that recognises their earnings potential and skill sets. 


No matter what your earning style, speaking with a mortgage adviser is the best way to understand what products are available to you. The Allegro team are happy to explore the possibilities with you, and find a product that can most benefit you. We’ll also help navigate through the application process, to make sure that it’s as stress-free as possible. 


To help you prepare to apply for your mortgage as a self-employed person, it’s best to: 


Keep accurate financial records.

Make sure your accounts and tax records are up-to-date, and that you’ve got a record of your income. The more information lenders have to work with, the more options there are to look into. 


Seek professional advice

With specialist mortgages available, it’s a great idea to discuss the products that are available to you. They will know the lenders who are most open to each circumstance, and understand how to get the best product available to you. 

Wherever you are in your mortgage planning process, talk to Allegro Mortgages. We help people in Milton Keynes and beyond get mortgages that work for them.