If you are self-employed you will have the widest choice of lenders available if you have been self-employed for 3 years or more and have accounts to support your application.
However, there are lenders who will accept fewer years of self-employment, some as few as one years, if you also meet the required affordability criteria. A healthy deposit will always help you get the best available rates too.
Some lenders consider businesses that have had a decline in profits in recent years, whereas others won’t consider a drop of £1! Either way we can help in these kinds of situations, it all depends on why the profit has dropped and by how much.
Yes and no! Most lenders use your director’s salary and dividends only, to calculate how much you can borrow. However, Just 4 Mortgages able to arrange market leading mortgages where lenders will use your director’s salary, plus your share of the companies profit. Afterall, this is money the company generated, you simply chose not to draw it out. For certain individuals, this can be a much larger figure, leading to a much larger available mortgage.
If you’re self-employed and need a mortgage, the main way a lender will verify your income is through:
The issue for CIS workers is that most lenders use your self-employed ‘profit’ not the income from your CIS slips. As you are likely to write off expenses throughout the year to reduce your tax bill, the ‘profit’ on your SA302’s/tax calculations is likely to be lower than on your CIS slips. However, we specialise in mortgages for CIS workers and can arrange higher borrowing amounts using your CIS slips. Depending on your circumstances, the average of your most recent 3, 6, or 12 months slips or even your profit from your SA302’s could get the best result for you.
As your contract is not permanent, lenders will often need greater reassurance in your ability to sustain work and income levels. Therefore, they will normally look at:
Your industry experience.
Your experience contracting and if the contract has been renewed before.
How long you have been earning at your current levels.
How long is left on your current contract or if it is to be renewed.
It’s important to remember that every lender is different. They all have a varied opinion on a massive range of criteria, which can make finding the right mortgage very complex.
This criteria also changes all the time, as every lender alters their stance on what is and is not acceptable – for this reason it would be inappropriate to list lenders as it could very soon be outdated.
The important thing to note here is that if you’re having trouble finding a lender to accept your unique situation don’t give up. You can book a free Initial Consultation at with our Nottinghamshire team who will be able to talk you through your specific circumstances remotely. We will be able to advice you on the best course of action to take without you needing to make any commitments there and then!