It shouldn’t make any difference whether you are employed or self-employed when applying for a mortgage. Unfortunately that is far from the realities of how the self-employed are treated by most lenders. For example, most lenders require a minimum of at least two years completed accounts, usually verified by an accountant and sometimes checked against your Inland Revenue returns.
When it comes to your trading status, Limited Company, Partnership, Sole Trader etc., this can complicate it still further as each lender will assess your income in a different way.
Thankfully we at Money Sage have been helping the self-employed for many years and successfully place the majority of our self-employed clients. We even have lenders that will accept income based on just one years accounts so helping those who have made the jump to work for yourself for the first time.
If you are a contractor, especially in the building or IT trade, this can also prove to be a hindrance in trying to find a mortgage, but just like the self-employed, there are lenders out there and we can find them for you.
Finally, most self-employed applicants use an accountant to prepare their ‘books’ but accountants see it as part of their job to minimise your tax bill using legitimate methods to reduce your taxable income. This though is the last thing you want when applying for a mortgage. Also, many self-employed people also earn money through the PAYE system or declare dividends, which can make their business income seem lower.
For these reasons – and given other challenges that you may face when applying for a mortgage – it’s really best to get impartial expert advice on getting the best possible mortgage deal.