Mortgages for Freelancers: How to Secure Approval with Expert Tips

Let’s be honest, getting a mortgage when you’re a freelancer or contractor can feel like a challenge. Lenders often prefer people with steady, salaried jobs, and your irregular income might seem like a red flag. But don’t worry – with the right prep and approach, you can absolutely secure a mortgage. Here at Mortgage Bridge, we’ve got your back. Let’s dive into what you need to know to make it happen.

What Challenges Do Freelancers Face When Applying for a Mortgage?

Freelance life has its perks, but when it comes to mortgages, things can get tricky. Here’s what you might face:

  1. Irregular Income: Your income probably fluctuates month to month, which can make lenders nervous.
  2. Proving Affordability: Without payslips or employer references, you’ll need to show tax returns and business accounts to prove your income.
  3. Perceived Risk: Lenders might see freelancers as higher risk because your income isn’t as predictable.
  4. Strict Requirements: Be prepared for more paperwork and tighter affordability checks compared to salaried applicants.

How Do Lenders Look at Freelance Income?

Lenders typically want at least two years of self-employment history. Here’s what they’ll be checking:

  1. Tax Documents: They’ll want to see your tax returns (SA302s) to get a clear picture of your earnings.
  2. Business Accounts: If your accounts are certified by an accountant, it’ll strengthen your case.
  3. Deposit Size: A bigger deposit can help reduce the lender’s perception of risk.
  4. Credit History: A solid credit score reassures lenders you’re good with debt.
  5. Future Contracts: If you’ve got ongoing contracts, showing these can help prove future income stability.

How Can Freelancers Improve Their Chances of Getting a Mortgage?

Want to boost your approval odds? Here are our top tips:

1. Build a Solid Financial Track Record

Consistency is key. Aim to:

  • Have at least two years of accounts or tax returns.
  • Keep your financial records accurate and up to date.
  • Avoid big gaps in your work history.

2. Save for a Bigger Deposit

The more you can put down, the better. A 20% deposit can make a big difference. Wondering, “How much deposit do freelancers need for a mortgage?” It really depends on the lender, but bigger is always better.

3. Keep Your Credit Score Healthy

Your credit history plays a huge role. Here’s how to keep it in shape:

  • Pay bills and debts on time.
  • Keep your credit card balances low.
  • Check your credit report regularly for mistakes.

4. Cut Down Other Debts

Lenders look at your debt-to-income ratio, so clear as much debt as you can before applying.

5. Work with a Specialist Broker

That’s where we come in! At Mortgage Bridge, we know the ins and outs of freelancer mortgages and can connect you with lenders who get your situation.

What Should Freelancers Avoid When Applying for a Mortgage?

It’s not just about what you do; it’s also about what you don’t do. Here’s what to avoid:

  1. Underestimating Expenses: Your net income matters, so make sure your accounts are accurate.
  2. Frequent Job Changes: Stick to a consistent work history if possible.
  3. Going It Alone: Not working with an expert can lead to avoidable rejections.

What Documents Do Freelancers Need for a Mortgage?

You’ll need to have your paperwork in order. Here’s what to gather:

  1. Tax Returns: At least two years of SA302s.
  2. Business Accounts: Certified by an accountant if possible.
  3. Bank Statements: Both personal and business accounts for the last few months.
  4. Proof of Deposit: Evidence of your savings.
  5. Client Contracts: Useful for showing ongoing income.
  6. Credit Report: A recent one to show your creditworthiness.

Success Stories: Freelancers Who Nailed It

Case 1: The Freelance Designer

  • The Issue: Irregular income.
  • The Fix: Three years of SA302s and a big deposit. We found a lender who was happy with their fluctuating income.
  • The Win: Approved for a 75% LTV mortgage.

Case 2: The IT Contractor

  • The Issue: Only 18 months of self-employment.
  • The Fix: Proof of ongoing contracts and a great credit score.
  • The Win: Approved with a mainstream lender.

Why Choose Mortgage Bridge?

At Mortgage Bridge, we specialise in helping freelancers and contractors get the mortgages they deserve. Here’s why you’ll love working with us:

  • We know which lenders cater to freelancers.
  • We’ll guide you through the process, step by step.
  • We’ll make sure you get the best deal for your situation.

Ready to Get Started?

Getting a mortgage as a freelancer might take a bit more work, but it’s 100% doable. With the right preparation and a little help from us at Mortgage Bridge, you can make it happen. Let’s chat and see how we can help you secure the keys to your new home. mortgage and achieving their homeownership goals.