A Guide for Self-Employed Mortgage Applicants

You can get a mortgage if you are self-employed. This guide sets out the general application criteria often requested by lenders, challenges you may face and how a mortgage broker such as Fluent Money may be able to help.


In this article

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Self-Employed Mortgage Applications

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Common Challenges You May Face

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What Mortgage Lenders Consider as Self Employed

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Options If You Don’t Have 3 Years of Accounts

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Tips for Small Business Owners

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Working with Specialist Lenders if Your Partner is Self Employed

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How Fluent Money Can Help

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Specialist Mortgage Lenders and Self Employed Applicants

Self-Employed Mortgage Applications

The application criteria for your self-employed mortgage may be more stringent than an employed person. You may need to provide additional documentation to demonstrate your financial stability and ability to make mortgage repayments. Working with a mortgage broker such as Fluent Money who has experience with self-employed clients can help you navigate the application process and find the best mortgage deal for your circumstances.

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Self-Employed Mortgage Application Criteria

The self-employed mortgage application criteria may vary between lenders, but there are some general requirements that are normally considered if you are self-employed. These may include:

Income: You will need to demonstrate that you have a reliable source of income to make your mortgage repayments. Being self-employed, you will typically need to provide at least two to three years of accounts or tax returns, along with bank statements and other financial documents.

Affordability: Lenders will assess your affordability based on your income and expenses, they may also consider your credit history and other financial obligations. Supplying this information helps demonstrate that you can afford to make your mortgage repayments, even if your income is variable.

Business stability: If you own your own business then a lender may want to consider the stability and sustainability of your business, including the length of time you’ve owned it and the nature of your work. If your business is relatively new, you may need to provide additional documentation to demonstrate its viability.

Deposit: You may need to have a deposit to put towards the purchase of a property, typical minimums are around 5% of the property value. The size of the deposit required will depend on the lender and the type of self employed mortgage you are applying for.

Credit history: Lenders will typically run a credit check as part of the application process and will more than likely consider any outstanding debts or missed payments when assessing your eligibility.

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Fluent Money are experts in Self-Employed Mortgages. If you are Self-Employed and thinking of taking out a Mortgage then speak to an adviser today.

What are Common Challenges Faced by People Applying for a Self-Employed Mortgage?

Self-employed individuals may face several challenges when applying for a mortgage. Here are some common challenges:

Income Verification: You may find it more difficult to provide evidence of your income compared to someone who is employed and can provide wage slips. You may need to gather relevant tax returns and account statements to verify your income.

Variable Income: You may have variable income, which can sometimes make it difficult to demonstrate affordability over the long term. Lenders will need to be satisfied that you have a reliable income stream and can afford to make monthly mortgage payments. Fluent Money advisers are knowledgeable in proof of income requirements and can help guide you on what lenders are looking for.

Deposit Requirements: Lenders may require a higher deposit if you are self-employed due to the perception of being a higher risk. Bigger deposit requirements can mean it can take longer to save up.

Credit Scoring: Lenders may be more cautious when it comes to self-employed borrowers and may take a more conservative approach to credit scoring. This can result in higher interest rates or lower loan amounts.

What do Mortgage Lenders Consider as Self-Employed?

Do you work for yourself? Are you a business owner or a freelancer? If you answered yes to any of these questions, then you may be considered as self-employed.

Here are some different types of self-employed statuses:

Sole trader: You own your business by yourself, keep the profits after tax and are responsible for your business.

Freelancer or Contractor: You’re hired to work on a per job basis.

Registered as Self Employed with HMRC: You work for yourself, and you don’t get paid via an employer through PAYE.

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What Happens If I Don’t Have 3 Years of Accounts to Prove My Income for a Self-Employed Mortgage?

Most mainstream lenders will require to see 2 to 3 years’ of accounts as proof of your income. If you are newly self-employed and don’t have this, then you may still be able to apply for a self-employed mortgage via a specialist mortgage lender.

You will still need to prove your income to a specialist lender however they may be more flexible on the different types of proof they will accept.

Fluent Money are specialists in self employed mortgages and have a panel of specialist mortgage lenders who may be able to accept mortgage applications from applicants that don’t fit the traditional criteria pathways, we can guide you on what documentation you can provide.

Is It Hard to Get a Self-Employed Mortgage If You are a Small Business Owner?

It is still possible to get a mortgage as a small business owner. The key is to provide details of your income and financial stability, and you may want to work with a lender who is experienced in working with self-employed borrowers.

Some tips to increase your chances of getting a mortgage as a small business owner in the UK include:

Have a solid business plan: Lenders will want to see that your business is viable and has a plan for growth and profitability. Be prepared to provide details on your business model, target market, and financial projections.

Keep accurate financial records: As a small business owner, it is important to keep detailed records of your income and expenses.

Save for a larger deposit: Lenders may require a larger deposit from self-employed borrowers. Saving for a larger deposit can help demonstrate your commitment to the mortgage and increase your chances of approval.

Work with a specialist lender or mortgage broker: Specialist lenders and mortgage brokers such as Fluent Money, have experience working with self-employed borrowers may be more likely to offer mortgage products that are tailored to your needs.

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Is It Hard to Get a Mortgage if Your Partner is Self-Employed?

Lenders will consider the income and financial stability of both partners when assessing mortgage applications, regardless of whether one or both partners are self-employed.

To improve your chances of getting a mortgage if your partner is self-employed, you should be prepared to provide detailed documentation of both your incomes, expenses, and financial stability.

Working with a specialist lender and mortgage broker who has experience working with self-employed borrowers may also be helpful. They can help you understand the criteria used by lenders when assessing mortgage applications and can provide guidance on how to improve your chances of approval.

By demonstrating that you are financially responsible and can afford to make mortgage repayments, you can increase your chances of getting a mortgage, even if your partner is self-employed.

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How Fluent Money can help you get a Self-Employed Mortgage

Working with a mortgage broker such as Fluent Money can be particularly helpful for self-employed borrowers, we may be able to find mortgage products that are better suited to your needs.

Fluent Money can help you get a self-employed mortgage in the following ways:

Finding lenders that specialise in self-employed mortgages: A mortgage broker can identify lenders who have experience working with self-employed borrowers and can help you navigate the application process.

Advising you on the best mortgage product: We can help you choose the right mortgage product for your needs, taking into account factors such as your income, expenses, deposit, and credit history.

Preparing your mortgage application: We can provide help with preparing a comprehensive application that includes all the necessary documentation, such as tax returns, bank statements, and accounts, making the application process more streamlined.

Negotiating on your behalf: We will negotiate with lenders on your behalf to secure the best possible terms that we can achieve, with conditions such as interest rates, loan amounts, and repayment periods.

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Why a Specialist Mortgage Lender May be a Suitable Option If You are Applying for a Self-Employed Mortgage?

Specialist mortgage lenders can be a good option. They often have more experience in assessing self-employed borrowers in comparison to traditional lenders, who may use a one-size-fits-all approach. Specialist lenders often have underwriters who are trained to evaluate the more complex income structures of self-employed individuals. This means that they may be more willing to consider a wider range of income sources, such as dividends or investment income, and may be more open to using more flexible affordability criteria.

They may also offer more tailored mortgage products that are better suited to the needs of self-employed borrowers. For example, they may offer mortgages with lower deposit requirements or longer repayment periods, or mortgages that can accommodate irregular or seasonal income patterns.

In addition, specialist lenders may be more willing to consider self-employed individuals with a less-than-perfect credit history. They may use different credit scoring models or take a more holistic approach to credit assessment, considering factors such as the length of time the borrower has been self-employed and the stability of their income.

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