I am Recently self-employed can I obtain a mortgage as I dont have my accounts filed yet?
The high street mortgage standard for Recently Self Employed Mortgage applicants is a minimum of 2 to 3 years trading. There are a growing breed of centralised Mortgage Lenders that will accept 1 year’s trading typically at a slightly higher interest rate.
It starts to gets tricky though if you are unable to provide 1 year’s accounts or HMRC Tax Calculations. The Mortgage Lenders will normally require the following before they would entertain lending:
- Last 3 months’ bank statements showing income being credited.
- An understanding of the contracts you have in place to supply regular pay.
- A suitably qualified accountant to provide an accurate projection the financial year end.
- The nature of the occupation to be held in good regard.
- Look closely at the track record and prior experience you have in the sector.
RECENTLY SELF EMPLOYED MORTGAGE EXAMPLE A:
An employee was working in a Retail Outlet selling clothes but for the last 8 months has been a self-employed mini-cab worker, the answer would probably be ‘no’. There is a change of occupation and the new job is largely cash-in-hand.
RECENTLY SELF EMPLOYED MORTGAGE EXAMPLE B:
IT employee working for a large UK bank for 3 years. He has decided that if he set up his own limited company, he would continue to work at the same bank, and charge more. After a few months then the answer could be ‘yes’ to a mortgage. The job is constant and being a contractor is common to the sector.
So is all lost for EXAMPLE A? Well not quite. It depends on what they are trying to achieve, read on.
- Product Transfer If they have a mortgage and are looking to purely swap it to a better rate then we could potentially help.
- Capital Raising. If they already have a mortgage on their property then there are a number of Second Charge Mortgage Lenders will consider lending after 6 months trading.
- Buying a new home to live in. To use their income they will need to wait until either they have 1 year’s accounts or HMRC tax calculation. However, we may be able to solely use the income of joint applicant (in some instances we can get up to 6 times income as a mortgage).
- Buying a new property to let. There are a few Buy-to-let Mortgage Lenders that have no minimum self-employed trading period or income requirement, provided the expected rental income is sufficient to service the mortgage and cover void periods.
Niche Advice offers appropriate advice to Recently Self Employed mortgage applicants who have been trading for a short or long time. To find out more complete the Contact Form on this website or call T: 020 7993 2044.
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines.