Many people believe that it is much more difficult to obtain a mortgage if you are self-employed, however, if you have the right paperwork and can prove your income your application will be viewed and processed in much the same way as an employed persons would.
Before the most recent financial crash self-certification mortgages where common in Northern Ireland, these products have now been banned and now you will have to show proof of earnings for the past 2-3 years.
Proving your Income !
Proving income for a self-employed person should be relatively simple providing your books are well maintained and your taxes are up to date.
Depending on your lender’s criteria you may have to produce any or all of the following in order to prove your income.
SA302’s – An SA302 is simply a document provided by the HMRC which confirms how much tax you paid in total for an entire financial year. As a self-employed person applying for a mortgage you can expect to be asked for 2-3 years sa302’s.
If you have an accountant they should be able to provide these for you and if you complete your own tax returns you can download them online from within your HMRC account.
Accountants Reference – Instead of an SA302 your lender may ask you to provide an accountants reference. This document can be obtained directly from your accountant, they will need to certify the document with their stamp, date and signature.
The reference will show your earnings, expenses and profit and will usually confirm that all of your tax affairs are paid and up to date.
Business Bank Statements – If you are self-employed it is good practice to have a separate account for all of your business affairs.
Most Lenders will want to see 3 months business statements as well as your SA302’s or accountants reference, but some lenders will ask for up to a year’s worth of statements
What Mortgage Products are Available ?
The truth is that self-employed mortgage products don’t exist and as a self-employed applicant you will have access to exactly the same product range as an employed person providing you satisfy the criteria.
Who is the Best Lender for the Self-Employed ?
All Banks and Building societies apply different criteria to each other when they are assessing mortgage applications. Some will want to see 12 months Bank Statements some will only ask for 3.
Our mortgage brokers deal with criteria issues every day and once they have fully assessed your situation they will know which lender is most likely to accept your application.
How to improve your chances of being accepted !
The following points apply to all mortgage applicants regardless of whether you are self-employed or not as you will effectively be judged by the same criteria.
Control your spending – All mortgage applicants will be asked detailed questions about your income and expenditure and they will also ask to see 3 months Bank Statements which will be assessed by an underwriter in order to verify the answers.
Banks and Building Societies will usually be more concerned about committed expenditures such as loans, overdrafts and credit cards than normal day to day spending but ideally, they will show that you are left with enough money at the end of each month to cover the mortgage amount.
Improve your Credit Report – You can improve your credit score by clearing off loans and credit cards.
Missing payments will undoubtedly have a negative impact on your credit score some lenders will accept an applicant who has had one late payment in the last year and some won’t.
Larger Deposit – If you are able to put down a larger deposit when you are purchasing the property you will represent less of a risk to the lender not only that but you will have access to better rates.
Talk to a Mortgage Broker – Mortgage Brokers have access to hundreds of lenders and products and they will also have a detailed knowledge of each individual lenders criteria which means that they will know who is most likely to accept your application.
We have mortgage brokers across all of Northern Ireland and we are ready to help with any self-employed mortgage inquiry that you may have.