There are hundreds of thousands of self employed people in the UK. In the past, many found it difficult to get their hands on a mortgage, as lenders made little effort to understand their finances, but this has changed dramatically in recent years with mortgages becoming much more available to the self employed market.
Self Employed Mortgages
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Shop around: find the best self employed mortgage for you
Most lenders now offer self employed mortgages, and an increasing number of specialists exist, so it is worth shopping around.
Bear in mind that the size of mortgages and the interest rates offered to you may be influenced by the type of work you do. For example, if you have been working as a plumber for many years, you will probably be regarded as a safer bet than a fledgling musician, if you can demonstrate regular work. So a greater range of self employed mortgages will be available.
If you're on a short term contract, it will work in your favour if you have been with the same employer for a reasonable period of time, and had your contract renewed. The longer the contract, the better.
Get self employed mortgage advice
If you are in the market for a self employed mortgage, your financial circumstances are likely to be more complex that your employed counterparts. It can make sense to consult a mortgage broker who can search the market for the most appropriate self employed mortgage for you.
Self cert mortgages
Many self employed mortgage lenders will ask to see three years of audited accounts, so if your business is younger than that, a self-cert mortgage (or self certified mortgage) may suit your needs instead. Note that self-cert mortgages may be charged at higher interest rates than standard self employed mortgage deals.
Self employed mortgages from mainstream lenders
If you are self employed, have more than one source of income or work on short-term contracts, you may have difficulty getting a mortgage from a mainstream high street lender.
But do not despair. There are plenty of options available to you. Most banks and building societies have a specialist arm dedicated to providing mortgages for the self employed (among others).
A full range of rates should be available to you: fixed, capped, discounts, trackers and flexible deals.
To prove your income you will have to get your accountant to provide up to three years' worth of audited accounts. These should show that you can afford to repay the mortgage based on your net profit.
If you have been trading for less than three years you could run into problems, or if your accounts have shown a downturn in any of the past three years some lenders may not offer you a mortgage. In addition, some lenders will take an average of the past three years' income rather than just looking at what you have earned in the current year.
If you have difficulty proving your income, a self-cert mortgage may be the answer.
A mortgage adviser or broker could be your quickest and easiest route, as they know which lenders offer mortgages for self employed borrowers, which products they offer and what their terms and conditions are.
Pros and cons of self employed mortgages
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