Well, the end of the year is fast approaching and I am expecting a quieter time during the winter, especially with the stamp duty holiday finishing in March. I do love this time of year with the autumn leaves falling but it’s always so much harder to get up and get going when it’s still dark! Still, winter for me is a time for planning ahead for the coming year.
Getting a mortgage when you are self-employed can also take a bit of planning. With jobs disappearing due to the pandemic, lots of people have decided to set up their own businesses so I thought I would share a story with you about a self-employed couple who needed a new mortgage to move house.
I had worked with these clients on an earlier mortgage, before they were self-employed, and I was so pleased that they decided to come back to me. Both had become self-employed within the past year as directors of a limited company. When they first approached me, they had been trading for less than a year.
Getting a mortgage when you are self-employed can be more of a challenge as you need to prove to any potential lenders that you have a reliable income. Self-certification mortgages are a thing of the past and lending criteria has been tightened up since the Mortgage Market Review in 2014. However, providing you can evidence your income, you should have the same access to mortgages as everyone else.
So, what else do you need to have in place? Well, a good deposit and credit history will obviously improve your chances of a mortgage offer and, of course, make sure you are on the electoral role. Lenders may also want to look at your bank statements to check your outgoings to make sure you can afford the repayments. A professional mortgage advisor with access to the whole market will help you to find the most suitable mortgage for your circumstances, whether that’s a mainstream bank or a specialist lender. They will know which lenders are more likely to offer a competitive rate if you are self-employed.
According to Mortgage Introducer in an article published in 2018 “when it comes to trying to get a mortgage, people living a varied working life might feel like a minority; but they’re a fast-growing minority and are leading the way for the rest of the country. There’s over four million self-employed people in the UK country, many of which mistakenly think their varied income or lack of three years’ worth of accounts means they automatically don’t meet requirements for a mortgage.”
So, back to my story! I was able to help my clients with a mortgage once they had been trading for a year. They had to talk very nicely to their accountant to get their accounts in order at top speed but we got everything in place and they have now moved into their new home 😊.
If you’re self-employed and planning on applying for a mortgage, I would honestly recommend getting to know your accountant as well as ensuring your mortgage advisor has access to your accountant. Keep in touch throughout the year and be extremely nice to them at year end if you want them to complete your accounts quickly! Bear in mind that as of TODAY (Friday 11th December) there are only 52 days left to submit your tax return by the 31st January 2021 deadline.
Get in touch:
Heide Swift DipFA, CeMAP, CeRER