How to get a mortgage if you are self-employed

May 2, 2017 by Brendan

Mortgage applications

If you want to buy a house and are self-employed, you may find it more difficult to get a mortgage compared to being employed. There are, however, steps you can take to make it more likely that your mortgage application will be accepted.

Prior to 2007, a self-employed person could get a mortgage through a process known as ‘self-certification’. Lenders accepted a statement of earnings rather than asking to see the business accounts as proof of income. This system was often abused by borrowers making false income statements, which led to the banning of self-certified mortgage applications.

A self-employed mortgage, as such, does not exist. If you are self-employed, you apply for a standard mortgage offer that has the same fees and interest for both employed and self-employed people. What is different is the application process and what information the self-employed need to provide.

Most lenders require to see at least two years’ worth of accounts that have been checked by an accountant. You also need a record of steady employment from before you became self-employed, and you should have a good credit history.

As with all mortgages, you will need to pay a deposit. The best interest rates are available for people who have a large deposit.

The amount that a lender will give you will be based on your average profits over the past few years.

If you are a startup business or have been trading for less than two years, it is still possible to obtain a mortgage. If you have a good work record in the same industry as your business, then it will be easier to get a mortgage. If you have a large number of work contracts lined up that prove you will receive a regular income in the future, the mortgage application will be viewed more favourably. The lender is looking for assurance that you will be able to afford the mortgage repayments.

If took out a mortgage when you were employed, and want to remortgage as a self-employed worker, then the application process is similar to applying for a new mortgage.

A mortgage advisor or broker can make a mortgage application easier. They can advise you on what documents and information you need for the application and assist you in sourcing the best mortgage deal.

Owning your own home is a dream for many households. Being self-employed need not be a barrier to that dream.