Self-Employed Mortgages

Perhaps you have been told that you will not be able to get a good mortgage, or any mortgage at all, because you are self-employed. While it may have been difficult in the past for self-employed individuals to get mortgages due to their lack of provable income, this is no longer the case. While lenders do prefer to see your pay slips to prove your income, many are beginning to realize that self-employed mortgages do not pose a high risk to them as a lender.

Which Self-Employed Individuals Are Most Attractive to Lenders

The main reason why a lender would shy away from a self-employed individual is because of a lack of provable, steady income. Many industries that the self-employed are involved in do not pay on a regular basis. A contractor, for instance, may go months without a good contract, and then may have one job that pays enough to sustain his family for several more months.

When you are shopping for self-employed mortgages, you will find that the more employable you appear to be, the more likely it is that you will have an easy time getting a mortgage. For instance, a skilled labourer, such as a plumber, would have an easier time finding work than a highly specialized individual like a novel writer. Those who appear less employable may need to shop a little harder to find self-employment mortgages. You will also need to demonstrate regular income for the past few years when applying for these loans, so if you have recently started your business, you may find that you cannot get approved for self-employed mortgages.

 

How Self-Employed Mortgages Work

The amount you can borrow with self-employed mortgages depends on the value of the home you are purchasing and the amount you make in your business. Lenders will typically lend up to 75% of the home’s value, although some will lend more. Most lenders will lend around three times what you make in a year. For this reason, it works best if you have at least two or three years of earnings to report.

When you apply for self-employed mortgages you will have several options to prove your income. If you wish, you can apply for a self-certification mortgage, which allows you to simply state how much you make. If not, you will need to provide two to three years of audited accounts for the lender to see. Sometimes a letter of confirmation from your accountant will be sufficient.

Remember, competition for mortgage customers is extremely high, and this is true for self-employed mortgages as much as it is for traditional mortgages. Do not listen to a lender that tells you that you will have to go through many extra steps or pay higher fees to get your mortgage. Shop around carefully, and you will find that there are many self-employed mortgages available for you.