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How to get a mortgage when you are a new business...

When you start your new business, you probably won’t have any accounts or books that show your true income. 

If you’re yet to complete a tax return for your first year of trading, then it’s unlikely that a lender will accept your mortgage application. 

Despite this, if you are somewhat close to the end of your first trading year (around 10 months), you could look at getting a mortgage Agreement in Principle (AIP).  

An AIP lasts for three months and ensures that you know, in advance of putting an offer on a property, what you can afford to spend on one.  

The figure that a mortgage adviser would use on the AIP would be an anticipated earning as a net profit/salary and dividend, as it is still too early to be completely accurate

Who will lend to someone newly self employed?

There are specific companies out there that will be willing to offer you a business loan for your mortgage, but they can be very expensive and can often need heavy collateral assigned to them, such as your property.  

Because of this, you should speak to a adviser that has access to a wide panel of funders and specialists that will look at your application. 

As a result, it’s important to know that there are specialist lenders that will look at mortgage applications, even if you’re self-employed with no accounts.   

Lenders have to prove that they have lent responsibly and base their application decisions on an applicant’s proof of affordability. Without your first year’s tax return, they don’t have this ability which means they won’t lend to you – even if your first six months was a huge success.  

What’s the most I can borrow if I’ve only got one year’s accounts? 

It’s usually around the same as an employed applicant, so between 4-5x your income, dependent on the lender and your credit score.  

For example, if you earn £30,000 a year, you could expect to borrow £120,000 - £150,000, depending on the lender. 

For more help and advice about getting a mortgage when you are self employed, take a look at our page here.

For advice on getting a mortgage if you’ve only got one year’s set of accounts, speak to one of our expert advisers who will be able to help you with the next steps.