If you’re self-employed, you might believe you’ll find it harder to get a mortgage than you did when you had a full time job. This both is and isn’t true. Lenders don’t provide employed and self- employed borrowers with different types of mortgage, it’s just that the way they assess your income varies slightly.
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Whatever form of income you have – be that pension income, contract income, investment income, bonuses or commission or a salary from your own firm or a global multinational company – mortgage lenders in the UK must abide by the same rules. These were brought in following the financial crisis and are designed to protect individuals in the UK from borrowing more than they can afford to repay.
There are more than 100 mortgage lenders in the UK and over 50,000 mortgage products available – proving that within that massive range, it’s highly likely you’ll be able to find a lender and a mortgage that’s right for you. Finding it comes down to knowing what sort of lender wants to lend to a mortgage borrower like you. That’s where a good independent mortgage broker comes in.
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Employed versus self-employed
While those in full-time PAYE employment can typically walk into their local bank branch and be offered a mortgage, this isn’t usually the case for the self-employed. This isn’t because it’s harder to get a mortgage if you work for yourself though.
High street lenders typically deal with customers who have more straightforward finances as they are far easier to process online. They also only have access to mortgages that they offer themselves, meaning a far narrower choice.
Mortgage brokers take time to consider your personal financial circumstances and we can help you to get the right paperwork in the right format so you’re submitting all the correct documentation you need to in order to secure the mortgage. We also have access to nearly all lenders in the marketplace, so if your particular situation doesn’t fit one bank, we will almost certainly know which bank or building society will want your business.
There are newer and smaller challenger banks around now that specialise in lending to self- employed borrowers and many of these only offer deals through mortgage brokers, so it’s worthwhile talking to one.
As is the case for contractors lenders will assess the income you earn through self-employment. They will typically ask to see between two and three years’ accounts that have been signed off by an accountant. Some specialist lenders do accept just one year of accounts however.
They may also want to understand how your business makes money and whether you have new clients or contracts in your future pipeline. SA302 forms also form a critical part of your application with lenders usually wanting to see these forms from the past two or three years.
If you are in a partnership, your share of the partnership’s profits will constitute your income and it’s this that lenders are likely to assess when considering your mortgage application.
There are different rules again if you are set up as a limited company. Rather than assessing your income based on your full earnings as they would a sole trader, lenders typically look at your salary and dividend income and calculate what you can afford on the mortgage based on this.
This can be challenging as tax accountants seek to minimise tax payable on income, sometimes by reducing the salary you take and maximising dividend income which, while taxed less, is more variable and not seen as so reliable by all lenders.
There are still options however, it’s just important to work closely with your adviser to ensure you get the mortgage. Some lenders are more able than others to look at your business in the round and assess your ability to repay the mortgage on this rather than just straightforward salary income.
A mortgage adviser with experience working with lenders that specialise in helping eslf-employed borrowers to buy their own home should be able to help you work out how much you can borrow and which lender will be right for you. Speak to an adviser now.
Find Out Current Best Rates
|1.29%||Discount||2 years||5%||4.56%||2 years||£0|
*APR = Annual Percentage Rate *ERC = Early Repayment Charge
*These figures are only illustrative. An assessment of your needs will be confirmed before a recommendation can be made. A Key Facts Illustration, which is personal to your circumstances, will be provided if a recommendation for a mortgage product is made.
In assessing your requirements, we do not use credit scoring and we can provide an accurate estimate of the amount of borrowing and the viability of your requirements, without effecting your credit score.
We avoid credit searches at the initial stages given that numerous credit searches will impact your ability to access cheap credit. It is clear that too many credit applications in a short period of time will impact your score and whilst it is important to shop around, formal applications for a mortgage can trigger rejections, as it gives the impression you may be desperate for credit. It is essential when making enquiries for any financial product, that the Company does not credit score you, until such time as you have agreed to make a formal application.
We can indicate your chances of approval prior to any application being made and where necessary, can obtain decisions in principle from lenders who do not use credit scoring.
Typically we assist customers who have a number of financial commitments and they are looking to understand how much they can borrow. A number of mortgage calculators are used on the Internet, which provide an indication of the amount of borrowing based on an income multiple. In reality, the calculation is much more complex and varies borrower to borrower and lender to lender. For example, a mortgage calculator may indicate a 4 times income multiple, but given the particular individual circumstances of the client and the lender’s chosen criteria and underwriting, the borrower may actually achieve 6 times income. In contrast, a mortgage calculator may indicate 4 times income, but due to an applicant having financial dependents, certain types of income, such as bonus or commissions, or other financial commitments, the specific lender may only allow 2.5 times income.
Clients we assist tell us from the outset, they would like a guarantee of the amount they can borrow and our knowledge of specific underwriting policies within lenders, allows us to accurately estimate, exactly what is available.
Importantly an initial discussion and agreement through us, does not impact your credit score
Capital Fortune are award winning London based mortgage brokers. We are based in the heart of London’s financial district near the Bank of England. We offer advice to first-time buyers, those moving house and to those looking to re-mortgage their existing deal to get a better mortgage rate.
We’re not tied to one lender so you can be sure we’ll get the best deal for you, from the bank or building society right for you.
We provide finance on both residential and Buy to Let property and can assist whether your looking to buy your first home, looking to re-mortgage or refinancing and restructuring your portfolio of buy-to-let properties. Our advisers are here to help.
We advise customers nationally from the Scottish Islands to the Isle of Wight and cover all the regions within the United Kingdom, including Northern Ireland.
Typically, we best assist clients with non-standard requirements and those we successfully help, generally face some sort of difficulty in the mortgage market. They seek not to be penalised for this difficulty and we look to secure them highly competitive, mainstream rates by asking our lenders to take an holistic view of their circumstances.
As expected, we offer all the usual mainstream products all standard mortgage advisers offer, but more importantly, we look to place cases of a more complex and specialist nature. This includes the self-employed, those with difficult income streams, contractors, unusual properties, foreign nationals, British ex pats abroad, overseas diplomats and those recently divorced.
We have long term relationships with nearly all the major UK lenders and have built strong trusted connections with lender underwriters at both a local and national level. Many of these key partners, prove the key to the success sometimes extending the parameters of their advertised lending criteria to assist our clients.
The promise of a rate is not the same as actually delivering a formal mortgage offer in the exact same terms. Our promise is our guarantee and many of our published independent client testimonials, confirm our ability to both deliver and help.
Alongside mortgage finance, our advisers will find you competitive life insurance, critical illness cover and income protection as well as being on hand to advise on a range of company and business insurance options.
Your Capital Fortune broker will be regularly on hand, not just through the process, but afterwards, sometimes, when you may need us most. We don’t just want you undertake the one transaction with us but seek to build a long term relationship and many of our clients have been with us for many years.
We seek to ensure the best possible results for those who choose to use us.
We totally appreciate we are not right for everyone. There are a range of other mortgage brokers in the UK but we hope that on searching through our website, viewing our published rates and transparency, that you will obtain a clear sense of how we operate and how we will look to assist you obtain the most affordable and suitable deal.
Our mortgages are here for all to see and if general information is all you need, you can search yourself here.
However, if you need the assistance of our broker team, we are here to help.
We hope you enjoy the website.
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