Self Employed Mortgages

Obtaining a Mortgage when Self Employed can be quite a bit of a daunting thought.

Having to liaise with your Mortgage Broker and Accountant to get your finances in check and make sure you get all the paperwork together that the Mortgage Lender is going to want to critique.

Although it can be a slightly more different process, it doesn’t have to be a worry.

Most Mortgage Lenders are Self employed friendly these days, but each will have different criteria you will need to meet to be able to obtain a Mortgage with that particular lender.

Self Employed Mortgage criteria

Some Mortgage Lenders will lend to you if you have 1 years worth of accounts.

Most Lenders will lend to you if you have 2 years worth of accounts.

And all Lender will lend to you if you have 3 or more years worth of accounts.

Lenders will usually want to see something that was once known as SA302’s, which most lenders still call them.

They are usually also known as Tax Calculations which is what most Accountants call them.

They will also want to see you tax year overviews, which are issued by HMRC.

You can get these directly from HMRC or through your Accountant.

In addition, you most likely be required to provide personal and/or Business Bank Statements.

Providing you are able to obtain the above, you should satisfy most lenders requirements.

What are the different types of Self Employed Mortgages?

Mortgages for Self Employed can fall into the following categories:

Sole Traders – most Sole traders will be able to obtain a Mortgage once they have a 2 year track record of earnings. However, it is more than possible to obtain a mortgage with just 1 years worth of accounts.

Limited Company Directors – Many limited company directors don’t wish to provide their full accounts. Fortunately this usually isn’t needed, despite some lenders still requiring this.

In many cases a summary of your salary and dividends from your tax calculations should suffice.

Ltd company directors usually treated as self employed when they own more than 25% of the business.

Although it could be less or more than this depending on the mortgage lender.

Partnerships – whether you are a professional LLP set up of or  50/50 partnership business with a friend, in any capacity. 

You should be able to obtain a Mortgage by providing 2 years worth of accounts or an accountants certificate.

CIS Mortgages – these are Mortgages designed to support those which work under the construction industry scheme.

and other Contractor Mortgages – IT Contractors are usually the most common other form of Self Employed contractor Mortgages.

Best Mortgage Lenders for the Self Employed

This is by no means an exhaustive list, but should give you an idea of some of the best lender for Mortgages for the self employed:

Halifax, is the biggest Mortgage Lender in the country and is also very good with the Self Employed.

They will consider using one years set of accounts in some cases.

Coventry Building Society not only provides one of the best service, they will also in most cases use your latest years figures to assess affordability. Even when the latest years is quite a bit higher than the previous, providing it makes sense.

Santander whilst in our opinion can be hit or miss. In some cases they will consider latest years figures.

Again this isn’t published criteria though and is very much subject to whether the underwriter wants to.

There are also several lesser known lenders who can provide Mortgages for Self Employed, when you only have 1 years worth of accounts.

They can only be utilised through a Mortgage Broker, so it’s worth speaking to a specialist if you do find yourself needing a self employed mortgage and are struggling to get one.

What are CIS Mortgages

CIS Mortgages are Mortgages for people employed under the Construction Industry Scheme.

The Construction Industry Scheme is a government backed scheme designed for construction workers employed under main contractors.

Many Lenders will deem those employed under the CIS scheme Self Employed.

But there a couple of mainstream Mortgage Lenders which will consider CIS workers in the same way they view employed persons income.

This can be great for affordability and often massively increase the amount the borrower is able to obtain through a Mortgage.