How to get a self-employed mortgage without business accounts
Being self-employed can often be seen as a burden when applying for a mortgage, but there are plenty of specialist lenders that focus solely on those who own a business.
When your business first starts out, it’s likely that you won’t have any accounts or books that show your true income – which is what’s needed when you are applying for a mortgage. Whilst there are companies out there that will offer a business loan specifically for mortgages, they can be expensive and often require heavy collateral such as your property. 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.
However, 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. 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.
They are usually more difficult to get because of the lenders’ difficulties in establishing how much you earn, which means that they can consider you a risk of not being able to pay back what you borrow. If you’ve been trading for more than three years, it’s likely that you’ll just be considered by lenders in the same way a standard mortgage would.
No. Self-cert mortgages, where you could tell a bank what you were earning without proving it, are a thing of the past since the recession and Mortgage Market Review. Gone are the days of pure self-cert mortgages, where self-employed borrowers could tell a bank what they were earning without proof, and borrow pretty much what they wanted. Since the recession, lenders have been forced to tighten their approach and request proof in almost all regulated borrowing applications. This means that the self-employed market has been hugely restricted, and with the number of start-ups increasing, there are more and more that are looking for self-employed mortgages.
It’s usually around the same as an employed applicant, so between 4-5x your income, dependent on the lender and your credit score. There is also a chance that a lender will look at your income projection, based on accounts that are yet to be drawn up. For example, if you have been trading for 20 months, you should have one full year’s worth of accounts plus nine months of the 2nd year.
For advice on getting a self-employed mortgage, speak to one of our expert advisers who will be able to help you with the next steps.
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