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Getting a mortgage when you’re self-employed: 5 ways to boost your chances

There are so many advantages that come with self-employment, but getting a mortgage when you’re self-employed can be notoriously difficult.

Few things will be more frustrating than knowing you’re making enough money to make payments without being able to convince lenders that you’ll be able to.

Getting a mortgage when you're self-employed

Here are five ways you can increase your chances of getting a mortgage when you’re self-employed:

Keep working

If you’ve only been self-employed for a year or two, consider waiting a while before trying to get a mortgage.

Lenders will want to know your business is viable in the long term and that your income will remain fairly steady, or at least heading up instead of down.

It’s hard to understand your earning ability if averages can only be drawn from a year or so. This means that lenders will usually need to see a proof of income extending over two or three years.

It’s possible to get a mortgage after only a year of self-employed work, but this often means taking on a higher interest rate.

Save up

Another reason to delay getting a mortgage when you’re self-employed is it will give you time to save a little more towards your deposit.

Income will fluctuate more at the start of your business, so it makes sense to keep a buffer in your bank account instead of putting everything towards the deposit.

More importantly, lenders will be more likely to accept the risk of lending to a self-employed person if they have a larger deposit to put towards their chosen property.

Keep a strong credit score

It doesn’t matter if you’re self-employed or working for one of the largest companies on the planet – your credit score is always going to matter.

However, a poor credit score is just one risk factor for lenders. Your self-employed status is another risk factor, so it’s even more important for you to maintain a spotless record.

If you need to improve your credit score, try taking a credit card or auto loan and paying it off diligently each month.

Hire an accountant

If you’re self-employed, a lender will want you to prove the income you’re declaring.

Though you might be fine doing your own accounts, a lender will need to see your business accounts after they’ve been prepared by a qualified accountant.

There’s no way to get around this, and it’s best to show you’ve been working with the same accountant for some time.

Keep up to date with all records

When it comes to getting a mortgage, paperwork matters. Former receipts, invoices, and self-assessment forms are going to be required, and you can’t always count on digital copies.

Make sure you keep all your records, properly filed and on hand for when you need to convince lenders to extend a mortgage.

Getting a mortgage when you’re self-employed: a summary

Getting a mortgage when you’re self-employed can sometimes be difficult, but it’s certainly not impossible.

These five tips should improve your chances of appearing favourably to mortgage lenders. If you’d like more advice on getting a mortgage when you’re self-employed, give us a call today – we’d love to help.

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