Many people in recent years have struck out on their own or gone into partnership to form a new business, and as a self-employed person, or business owner looking for a mortgage, you’ve invariably heard that it’s getting increasingly more difficult to get lending.

My aim in the article is to arm you with the things you need to know to make it easier to get a mortgage as a self-employed person…

Lots of mortgage providers promote themselves as specialists in self-employed mortgages and may say that it’s hard to get approved because it’s different. In essence all mortgages are the same, it’s how the lender looks at your income that differs.

There are things you can do to make it easier, and help your lender see your proposition differently, the main one being to use your accountant’s skills to the fullest.

Get planning with your accountant

Having a good relationship with an active accountant that shows an interest in your business, as well as discussing your personal finances and property plans, will impact your ability to borrow in the future.

Proof of being able to pay a monthly repayment plan for your mortgage is top of the list from a lender’s perspective, so as a self-employed mortgage applicant it’s likely you’ll need to be able to produce accounts prepared by a certified or chartered accountant.

From there it becomes all about whether you’re a sole trader, partnership or limited company. As a sole trader, all profit is considered as income, and you’ll need some forms from HMRC to demonstrate your compliance with taxes. As a partnership, all parties will need to produce proof of their share of the profits. A great accountant will be able to display this information so that the required data is easily accessed by a mortgage lender. Limited companies are a little less complicated as you can present your income along with dividends separately from your business accounts. However, all this information will need to be presented to a lender to help them make an informed decision on which mortgage product will suit you best.

Getting a self-employed mortgage takes more than good accounts

How long have you been in business? If your business has been operating for more than three years, lenders will consider this as a ‘good accounting history’. However, as mentioned above it’s how your lender looks at your proposition that makes the difference, not necessarily your situation.

Good credit history. It stands to reason that a poor credit history will harm your application, whether you’re a business owner or not. There are lenders that will help you, but our advice would be to get your credit in order as best you can before you begin looking for a mortgage. MK Mortgages can help you check your credit rating for no charge as part of our free advisory service.

10% deposit, or more. It is unlikely that you will find a lender willing to offer a 95% mortgage if you’re self-employed. That’s why we advise you to prepare for between 10% and 15% deposit before you engage a lender.

Get free advice from a friendly professional adviser

Here at MK Mortgages, Bicester I offer free advice on mortgages and mortgage protection, specialising in knowledge of business owners and military personnel going through the process of applying for a mortgage.

I am not a mortgage lender, but I do have whole of market access to all lenders enabling unbiased advice on all self-employed mortgage products available to you. I don’t use jargon and offer a straight-forward, yet hand-holding approach to help you through it.

There is no charge for my advice, even in more complex cases, however we do accept commission from all mortgage lenders, as any other adviser does.

If you would like straightforward advice on how to apply for a self-employed mortgage, get in touch with me on 01869 390490 or mk@mkmortgages.com. I look forward to hearing from you.

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