How to get a mortgage on your own

Self-employed people often face more challenges when trying to get a mortgage. However, that doesn’t mean securing one is impossible.

Your requirements for a self-employment mortgage

If you are a sole trader, lenders will want to see your net profit. They’ll take into account your share of net profits or dividends and salary if you’re a director of a company, while self-employed workers and contractors should expect lenders to look at their average income over the past few years.

Although lenders prefer those who have been self-employed for two years or more, you may still be able to get a mortgage even with only 12 months of bills. Typically, you will need to show that you have a large amount of work ahead of you, but keep in mind that you may have limited options.

How much can you borrow?

This depends on the value of your deposit and how much you win.

It is advisable that you save as much as possible for your deposit. This often provides you with a typical payment of 4.5 times your annual income. However, this number is not necessarily static, as it depends on your circumstances. the enhanced range of potential deals.

Once you have all the important information in place, a do-it-yourself mortgage calculator can help you get an idea of ​​how much you could borrow. Here are some more tips on how to get a mortgage as a self-employed person.

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Also read: What is better? Loan through a bank or a mortgage company?

Find a mortgage broker

As a self-employed person, time is unlikely to be your greatest asset. So finding a homeowners mortgage that you know what you’re doing should make the process more efficient for you.

While the cost of a broker might increase your overall costs, they will know what lenders want and can help you find the right deals. One thing to keep in mind here is that some brokers collect their fee from the lender, which means it would not cost you anything.

Increase your credit score

Sometimes it can be simple oversights that cause your credit score to drop, like old credit accounts that aren’t closed yet or not being on the electoral roll at your current residence.

You should check your score to see if you can make any improvements. Several companies allow you to do this, such as Experian, Credit Karma, and ClearScore.

Get an accountant on board

This is another tip that will increase your overall cost. However, professional advice should not be underestimated.

Lenders will be more likely to trust your financial details if your accounts have been prepared by a professional. You’ll also save yourself some time and benefit from the expert tax advice you’ll get. Having an accountant on board can help you with your tax changes and understand what he can and cannot claim as expenses, for example.

Get organized with your paperwork

As a self-employed person, you are already responsible for maintaining accurate tax records. Therefore, you should have a system in place to make documentation simple and straightforward for your lender.

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Lenders will also want to see the SA302 form, which you can access from your HMRC online account.

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