North East Mortgages - Mortgage Brokers & Protection Advisers
North East Mortgages - Mortgage Brokers & Protection Advisers

Self Employed Mortgages

More people are currently self-employed in the UK than ever before, but since the introduction of the Mortgage Market Review (MMR) in April 2014, lenders have concentrated more on 'affordability' putting the onus on the self-employed to prove income.

 

Self Certification mortgages are long gone, so lenders typically divide the self-employed into the following categories:

  • Sole Traders - Lenders will look at your profits when assessing your income, so most of the 'main stream' lenders now insist on seeing the past three years accounts, from a qualified Accountant, or SA302s for the same period. Lenders are increasingly using the self-assessment tax calculation, or SA302 form, to verify income for self-employed borrowers.
  • Partnerships - Lenders will look at each partners share of the profit, with criteria being similar to Sole Traders.
  • Limited Company - A limited company will have at least one Director, who normally pay themselves a basic salary plus dividend payments. The lender needs to take both these elements into consideration when assessing affordability. However, you may have profits that you choose to retain in the business, rather than take out in dividends. Some lenders will consider retained profits, but not all do! 

So what do you do if you do not have three years accounts? Well the good news is that a small band of lenders have started considering self-employed borrowers with just one years worth of accounts.

 

Any recent dips in income, lenders will require a satisfactory explanation.

Mortgages for Contractors

If you are a contractor, most lenders will want to see at least a 24 month history, with at the least a minimum of 6 months remaining on the present contract. Specialist lenders may take a 12 month history.

 

Be prepared to produce up to 6 months of both Business and personal Bank statements on application, with lenders requiring you to produce the following documentation on application.

  • Your current contract, and in some instances your previous contract. You will need to show an up to date copy of your signed contract, which should clearly state the length of Contract, and your current Contract rate. 
  • 6 months bank statements showing invoiced credits.
  • An updated CV outlining previous employment history.

The amount you are able to borrow differs from the normal underwriting process, with underwriters using a process that calculates annual gross earnings from a day rate. For example: Your daily rate x 5, x by 46 weeks.

 

Your home may be repossessed if you do not keep up repayments on your mortgage.

 

You can choose how we are paid for mortgages. We can accept commission from the lender in which no fee would be payable. However if you want to pay for our services by paying a fee, then a charge of 0.5% of the loan will apply.

North East Mortgages
31 Prensgarth Way  
South Shields

NE34 9HD

Telephone: 0191 4899291

Mobile:       07887 882755

 

email: 

office@ne-mortgages.co.uk

 

Use our online contact form.

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