Q: Can you get a mortgage when you’re self-employed?
Yes, you absolutely can! While securing a mortgage when you’re self-employed can be a bit trickier than if you were employed traditionally, it’s definitely possible. At Mortgage Bridge, we’ve helped many freelancers, contractors, and business owners get the mortgage they need.
Here’s everything you need to know about applying for a mortgage when you’re self-employed, from understanding what lenders look for, to the documents you’ll need, and common problems you might face.
What Do Lenders Look for in a Self-Employed Mortgage Application?
Q: How do lenders assess a self-employed applicant’s income?
Lenders typically assess your income by looking for stability and consistency. They want to see that you’ve been earning a steady income for a certain period, typically 2-3 years, which helps them determine if you can afford the mortgage payments.
If you’re self-employed, lenders are likely to request documents like SA302 forms (your self-assessment tax return), accounts, and bank statements to verify your income.
What Documents Do You Need for a Self-Employed Mortgage?
Q: What documents do I need to prove my self-employed income?
If you’re self-employed, you’ll need to provide several documents to support your mortgage application. The most important ones are:
- SA302 form – This tax form is issued after you submit your self-assessment and shows your total income and tax paid.
- Full business accounts – These should cover the past 2-3 years and include your profit and loss statement, balance sheet, and cash flow.
- Bank statements – Lenders will want to review your business and personal bank statements to check your cash flow.
What’s the Process for Self-Employed Mortgage Approval?
Q: How are self-employed mortgage applications assessed?
If you’re self-employed, your application will generally fall into one of these three categories:
- Sole traders: Lenders will use your SA302 form and tax returns to assess your income.
- Partnerships: They’ll assess your share of the profits from the business.
- Limited company directors: Lenders will look at your salary and dividends.
For each of these, you’ll need to provide documentation showing the income and any evidence of future earnings (like contracts or business plans). The more stable your income appears, the higher your chances of approval.
Can You Get a Mortgage If You Have Bad Credit as a Self-Employed Person?
Q: Can I get a mortgage with bad credit if I’m self-employed?
It’s possible, yes! While it can be more difficult to get approved for a mortgage with bad credit, there are still options available. Some lenders specialize in helping self-employed people with bad credit. We can help you find the right lender for your situation.
Having a poor credit history won’t automatically disqualify you, but it may mean you’ll have to provide additional documentation to show your current financial stability.
What Are the Common Problems Self-Employed People Face When Applying for a Mortgage?
Q: What are common challenges self-employed individuals face when applying for a mortgage?
Some of the most common issues self-employed people face are:
- Limited Financial History – If you’ve only been self-employed for a year, lenders may require you to show additional evidence to prove your income.
- Fluctuating Income – If your income varies year-to-year, lenders might be hesitant to approve your application. You may need to show proof of future income or contracts.
- Retained Profits – If you run a limited company and keep profits within the business rather than drawing them as income, some lenders may not consider these when calculating affordability.
If you’re facing any of these issues, Mortgage Bridge can help. We have access to a range of lenders who are more flexible when it comes to self-employed applications.
What Documents Will Lenders Ask for When You’re Self-Employed?
Q: Do I need to provide business accounts?
Yes, lenders typically ask for business accounts for the past 2-3 years. If your business is a limited company, they’ll want to see your financial statements. You might also be asked for proof of income, such as:
- SA302 forms for tax returns
- Bank statements
- Profit and loss statements
These documents help lenders assess whether you’re financially stable and can afford the mortgage.
Can You Apply for a Joint Mortgage if One Person Is Self-Employed?
Q: Can I apply for a joint mortgage if I’m self-employed and my partner is traditionally employed?
Yes, you can! Lenders will look at both incomes when assessing your mortgage application. As long as both incomes meet the affordability criteria and your self-employed income is stable, you can apply together. In fact, having a partner with a stable income can sometimes increase your chances of getting approved.
How Can You Secure a Mortgage When Self-Employed with Less Than Perfect Credit?
Q: Can self-employed people with bad credit get a mortgage?
Yes, it’s possible. It can be more challenging to secure a mortgage if you have a poor credit score, but there are still options. At Mortgage Bridge, we work with a variety of lenders who specialize in helping self-employed people with bad credit. We can connect you with lenders who are more flexible and understand your unique situation.
What Are the Steps to Applying for a Self-Employed Mortgage?
Q: How do I apply for a self-employed mortgage?
Here’s a simple breakdown of the steps to follow:
- Get your paperwork in order – Collect all necessary documents like tax returns, SA302 forms, business accounts, and bank statements.
- Assess your affordability – Lenders will want to make sure you can afford the monthly payments, so ensure your financial situation is clear.
- Consult a mortgage broker – Work with an expert (like us!) who can help you navigate the process and connect you with the best lenders for your situation.
Conclusion: How Can You Get a Mortgage When You’re Self-Employed?
Q: Can I get a mortgage if I’m self-employed?
Yes, it’s absolutely possible. The key is to provide the right documentation, demonstrate income stability, and work with a broker who understands the ins and outs of the process.
At Mortgage Bridge, we specialize in helping self-employed individuals secure mortgages, whether you have great credit or have faced financial challenges in the past. If you have any questions or need help with your application, don’t hesitate to reach out. We’re here to help you get the mortgage you deserve!
Frequently Asked Questions (FAQ)
Q: How long do I need to be self-employed before applying for a mortgage?
Ideally, you need to have at least 2 years of accounts, but there are options if you’ve been self-employed for less time.
Q: Can self-employed people get a mortgage without showing business accounts?
In some cases, lenders may accept an SA302 form or other forms of income evidence. It varies from lender to lender.
Q: How can I prove my future income if I’m self-employed?
Showing proof of contracts, client commitments, or business plans can help demonstrate future income to lenders.