Self-Employed Mortgages with One Years' Accounts
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Self-Employed Mortgage with One Year’s Accounts
Being your own boss brings many advantages – but it won’t necessarily make it easy to get a good mortgage deal. The good news is that some lenders welcome Self-Employed borrowers, even if you haven’t been running your company for long.
If business is going well and you have good credit, we can help you find a competitive mortgage deal.
Can you get a mortgage if you have been Self-Employed for one year?
Generally, Self-Employed people get a broader choice of mortgages if they have been in business for a couple of years. It’s because mortgage lenders like to have a good sense of your income before they approve your mortgage application. So the more months of business records they can look at, the more they will understand.
Some mortgage companies, however, will approve people who have just one years’ accounts. A few specialist lenders will even consider you with only 9-10 months self-employment records – but you will need to prove that your business is strong for this option.
How much can I borrow?
The way the lender calculates the loan amount is the same as for an employed person – it’s generally around four to five times your income. The difference comes in how you prove how much you earn.
When calculating how much to borrow, make sure that the monthly repayments will be easily affordable. Allow for variation in your income, as Self-Employment is sometimes unpredictable.
Think too about how you would cope if you’re unable to work due to illness or injury. There’s no sick pay for the Self-Employed, so you might need some savings as a back-up. You could look at income protection products.
What deposit will I need?
The average deposit is around 10% of a house price, but contributing 15% or more will get you better rates and more lenders.
How do I prove my income with only one year’s accounts?
With any mortgage application, you need to confirm your income. This can be more complex when you’re Self-Employed because your earnings can vary month to month.
Lenders will often look at your self-assessment tax return (SA302) because it states your income for the year. They might also request a year’s worth of accounts, certified by a qualified accountant.
The mortgage lender will check your credit score too. If you have any issues on your credit record, you could find it harder to get approval, or you may be charged higher mortgage rates.
Are there differences for Sole Traders, limited companies and partnerships?
The way lenders assess your income can vary depending on your business structure.
For sole traders and partnerships, lenders will usually ask to see your tax return. If you’re in a partnership, you will be assessed on your share of the profit.
If you’re the director of a limited company, the lender will usually ask for your latest year’s finalised accounts, and take your income as the stated salary plus dividends. Some lenders will include your net profit in their calculations – which will usually mean you can borrow more.
Every lender will have slightly different criteria and rules, however, which is why it can be helpful to seek mortgage advice.
Can I get Help to Buy if I am Self-Employed with one year’s accounts?
The government introduced Help to Buy to make it easier for people to buy a home. It only applies to new-build properties.
The scheme allows you to buy with just a 5% deposit, as the government lends you a further 20%, interest free for five years. You secure a mortgage for the remaining 75% of the house price.
Help to Buy is available to the Self-Employed, even those with only one years’ accounts. The challenge is in finding a willing lender – but a Mortgage Broker can help you achieve that.
How can a Mortgage Broker help?
Mortgage Brokers are finance professionals who specialise in mortgage advice. We help many Self-Employed people to find a suitable mortgage. By getting to know you, we will compare products across high street lenders and more specialist companies to meet your unique situation. We’ll manage the mortgage application process and make sure you have all the documents you need.
You 1st Mortgages is authorised and regulated by the Financial Conduct Authority , so you can relax and let us do all the hard work in achieving your property goals.