Self-Employed Mortgage: How It Works

If you’re self-employed you may be unsure as to how to go about securing a mortgage. But don’t worry, we’ve got you covered.

As with all mortgages, the key to finding the best deal for you is to shop around. Doing the research is important, even more so if you’re self-employed; as certain specific criteria have to be met.

How it works

Despite what you may have heard, there is a misconception around self-employed mortgages. What you would be applying for would be the same as everyone else, but with a few more extra steps.

What makes them different?

Before 2007, when the phrase credit crunch was far from the public lexicon, self-employed people looking to borrow would often apply for self-certification mortgages in which borrowers didn’t need to prove their income using bank-issued statements but provided loose info about what they earned; resulting in many, many mortgages being fast-tracked without the need for checks against the borrower.

Because of abuse of this system, fast-track and self-certification mortgages were later banned by the Financial Conduct Authority, making it much more difficult to secure long-term borrowing for people who are self-employed.

There are a number of specialist lenders who often offer mortgages designed specifically with the self-employed in mind. But mainstream mortgage lenders often lend to the self-employed too and you may not need to go through a specialist.

What do you need?

The majority of lenders are happy to give mortgages and remortgages to those who are self-employed if:

• They have been trading for between one to three years.
• Have two years of accounts or self-assessment tax returns available.
• Complete a self-assessment SA302 form to prove your income.

As with any mortgage application, you should.

• Do as much research as you can, into the potential lenders and rates associated with the mortgages on offer.
• Ensure your credit rating is the best it can be.
• Gather as much information as you can about your finances both current and future, this includes any contracts or clients you may have in the pipeline.
• Having the largest amount of deposits available will help convince the lender that you’re a responsible borrower.

There may be some scrupulous lenders may also want to see a prediction of your future contracts for their own security.

Shop around and compare self-employed deals to find the right mortgage that meets your needs. Speaking to a broker can help you find the right deal, and meet the requirements for an application before you start to apply.

Entering a conversation with a lender can be stressful and is often rife with fine print and confusing terminology; at the mortgage specialist’s we can guide you through and help you find the best deal.

Contact The Mortgage Specialists by phone at 0333 666 666 3 or use our form and we’ll help you find the best local mortgage advisor
Reading through Mortgage documents? Come across some words you’re not quite familiar with?

Use our Jargon Buster to help clear some words up.