If you’ve been trading for one year you will be able to get
a mortgage with the right help. Find a mortgage broker who knows about
mortgages for self-employed with 1 year’s accounts. They will be able to guide
you towards the best deals.
Why is Finding a Mortgage so Difficult for the Self-Employed?
Once a self-employed person has been trading for 3 years or more it is much easier to get a mortgage. This is because a lender will consider the employment to be stable and the wages regular. On the other hand, someone who has only been trading for a year doesn’t have an established financial record. It is harder for a lender because they don’t know whether the business will continue to flourish. If the business fails, then the lender will be looking at a substantial debt.
Don’t You Have To Be Self-Employed for 3 Years or More?
A lot of lenders do insist that self-employed workers produce accounts for 3 years. But, there are lenders who are willing to grant mortgages to people who have been self-employed for 1 or 2 years. Ask a mortgage broker. They will be able to find lenders that aren’t on the High Street.
How Do I Know How Much I Can Borrow?
That’s complicated. It all depends on the projections from your accountant and what the lender is prepared to accept. You will definitely need one year’s trading figures. Although, it might be possible to get an agreement in principle for a mortgage with say 9 or 10 months trading. You may be offered 4 or 5 times income, but the amount will depend on whether a lender bases this on the final accounts or takes projected takings for a further period. For example, If you have been working 1 year and 10 months, your yearly accounts may stand at £25,000. Your accountant forecasts that you will earn more this year and that by 9 months you will have reached last year’s figure of £25,000. If the 9 months is then divided over a period of 12 months you will be able to borrow more money.
What if I Have Bad Credit?
You might still be able to get a mortgage with bad credit and 1 year’s accounts. There are lenders who will grant mortgages as long as there are no serious debt problems on your credit file in the last two years. This includes CCJ’s, mortgage arrears or defaults. Missed or late payments aren’t take as seriously. If you have debt problems, you will also need to produce a deposit of at least 15% of the purchase price.
Where Can I Get Help and Advice?
As a mortgage broker who deals with mortgages for self-employed with 1 year’s accounts. They will know which lenders to approach and they can advise you about the amount you can borrow and the deposit you’ll need.