Discover the possibilities of Self Employed Mortgages!
Self-employed applicants can sometimes get the short straw when it comes to obtaining a mortgage, with lenders requiring you to provide more information than employed applicants.
With this in mind, it is essential that you take heed of self-employed mortgage advice from an experienced and knowledgeable company such as ours.
By speaking to a reputable Mortgage Advisor in Newcastle like Newcastlemoneyman, we will provide you with invaluable advice, no matter what sort of business owner you are.
If you are looking to buy a new property or remortgage soon, we are here to assist. Because we have spent many years working with self-employed clients from a variety of backgrounds, all looking for us to secure the best deal for them, we have vast in-depth knowledge of Lenders self-employed criteria.
How many years on the books do I need?
As a minimum, you will need one year’s on the accounts to get a mortgage. It tends to be self-employed specialist Lenders that will work off a single year; however, most High Street Lenders will want two years’ accounts.
How will a Lender assess my income?
Most Lenders take the average of your last two years’ worth of earnings. However, if your business is growing, some Lenders will work off the latest year and ignore what happened before.
I’m a Director of my own Limited company
Even though you are technically an employee of your business, Lenders do not assess you as such unless you own less than 25% of the shares. Most Lenders would add the dividend you have drawn to your annual salary to calculate your yearly earnings. The amount you can borrow will get based on a multiple of this figure.
There is the odd Lender who works from net profit rather than salary/dividend. In any case, this works well for Directors who keep their drawings low.
How much deposit do I need to put down?
The deposit required for self-employed mortgage applicants is the same as employees. The minimum deposit you need to put down for a mortgage application is 5%. If you only have one year’s accounts, you might need to put down more though.
There are many mortgage options for contractors. More and more people work from short term contracts these days. If you can demonstrate a good track record, then the Lenders can consider taking your “daily rate” rather than your net profit. It’s perfect for contractors though as Lenders will consider treating you as self-employed instead if that works out better.
The Lender will also ask you how long is remaining on your current contract. They need to have the confidence that your income will be ongoing to ensure you can afford your mortgage. It could be possible to get a mortgage even if this is the first contract you have had depending on your specific circumstances.
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