Self Employed Mortgages - 3 facts you need to know!
1. You do not need 3 years accounts to get a mortgage.
Contrary to a lot of rumours you do not need 3 years trading accounts to obtain a mortgage, there are numerous lenders in the market now assisting clients with only one years trading accounts. As an advisor we will always ask for 3 years but it is not necessarily essential to have 3 years if you do not have them.
2. It is no more difficult to get a mortgage if you are self employed compared to being employed.
Just because you are self employed does not mean it is more difficult to obtain a mortgage. If all the numbers stack up then the mortgage will more than likely by agreed. Lenders do not automatically make life for difficult for self employed applicants. In fact some lenders are more lenient and allow customers to use retained profits as well as income which can sometimes be more beneficial.
3. You can use latest years tax return for lending multiples and affordability.
There are numerous business's which go through a few years of lower income then all of a sudden increase dramatically which then in turn leads to a huge jump in income. A majority of lenders will usually take an average of the last two or three years for self employed clients, but there are now numerous lenders that will look at using the latest years increased income if it can be proven to be a sustainable increase.
We often see a lot of rumours flying around about self employed mortgages and how difficult it is for customers to get a mortgage is they are self employed. The market is now becoming more understanding of self employed customers and their need for mortgage assistance. It is also clear that self employed customer pose just as much risk as an employed customer these days with multiple corporate re-structures happening on a regular occasion, no job seems to be safe any more. If you are self employed, my advice would be to speak with an adviser as early as possible and introduce the advisor to your accountant. More than often we see accountants trying to 'help' their clients by offsetting costs and reducing their tax liability, whilst not realising the bigger picture. By showing smaller profits or income this can potentially hinder people looking to buy their dream home in the future. Seek advice sooner rather than later and any potential issues in the future can be mitigated massively.
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