Finding a mortgage deal when you’re self-employed can be tricky. As many as 71% of self-employed people said they felt discriminated against due to their employment status when applying for a mortgage, according to a recent survey by The Mortgage Lender. But, yes, it is possible to get a mortgage even if you have only been trading for a short time.
Traditionally, mortgage lenders would require you to have been trading for at least three years before you could be considered for a loan. This is because it is more difficult to establish a person’s income without this information, and consequently harder to assess the level of risk involved in lending to them. However, it’s now entirely possible to find a mortgage deal, even if you’ve only been self-employed for a short period of time.
We can secure mortgages for:
- Limited company directors trading for 12 months
- 12 months self-employed with bad credit
- Established companies recently limited
- Sole traders only trading for 12 months
- Contractors working for 12 months.
Who will lend to someone newly self-employed?
It used to be that only a select few lenders would offer loans to self-employed buyers, however, more and more lending organisations are now considering them. These range from well-known high street lenders to smaller, more niche companies. The lenders likely to accept your mortgage application will vary depending on your personal circumstances.
How long do I need to have been in business?
Many mortgage lenders will consider applicants with as little as one year’s accounts, provided that they have completed and filed a tax return for their first year’s business. However, if you’re still in your first year of trading, it may still be a good idea to apply; decisions on mortgage applications can take up to three months to complete, so applying early is an option. If you apply before the end of your first year, lenders will use your projected income to determine how much they are willing to lend you. Whilst not wholly accurate, this will give you a good idea of the amount you’re likely to be able to spend on a property.
How much can I borrow?
Self-employed buyers can borrow roughly the same amount as those who are employed. This is usually around five times your annual income. There are some lenders who may be willing to increase the maximum amount available to you, but this will be dependent upon your personal circumstances and proven affordability.
What if I have a poor credit history?
Provided that the property you’re looking at is deemed to be affordable to you by the lender, you should still be able to secure a mortgage offer, even with a poor credit rating. However, you will almost certainly need a healthy deposit to put down (usually around 15%). The only issue will be if you have CCJs or mortgage arrears within the last two years, as this will severely hinder your ability to acquire funding.
If you’re self-employed and looking to secure a mortgage, we aim to find the lender and mortgage product that’s appropriate for your needs. RfM Mortgage Services have access to the whole of the mortgage market, so whatever your circumstances we can help. To find out more and arrange a free consultation, contact Sharon Rigden on 01772 431233, email email@example.com or complete the enquiry form at www.rfmmortgageservices.co.uk.
RfM Mortgage Services is a trading style of Key Mortgage Advice Limited who is authorised and regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No 312930 at register.fca.org.uk
Think carefully before securing other debts against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage.
The Financial Conduct Authority does not regulate some aspects of commercial mortgages and buy-to-let mortgages.