If you have recently become self-employed, are a contractor or have been self-employed for a while, you may not be certain there are mortgage deals out there for you. Which companies should you approach, and will your existing mortgage lender treat you differently?
The good news is that more and more people are becoming self-employed and the popularity of contract work is also growing. This means lenders are responding with criteria and products to suit.
Starting with the most ‘vanilla’ lenders, the majority will accept applicants on standard deals with 2-3 years’ worth of accounts. It’s best if your accountant is ACCA registered or similar. If you have not been trading for 3 years, don’t worry as certain lenders will take less than this. Although the choice of lenders gets smaller and, potentially, the rates are a bit higher, there will be someone to help.
While certain lenders average out your profits, some will look at the latest year, as long as the jump from year 1 to year 2 isn’t huge and/or there’s a very good explanation. A lot of lenders will accept your SA302 and Tax Year Overview if you have been doing these yourself or don’t have full accounts. Some will use an ‘Accountant’s Reference’ as a simpler way of getting the information they need. If you’re a contractor, there are some mainstream lenders that actively encourage this type of applicant. Typically, they would work out your income by multiplying the day-rate by five (days) and then 48 (weeks) to get you annual income. You will generally need a history of contract work, although if you have moved to contract work and previously worked in the same line for some time, then this can also be accepted.
For more details, speak to your financial adviser today.