Getting a mortgage is likely going to be the biggest or one of the most significant purchases you’ll make in your lifetime. And with the average house in the UK around £285,000, it’s quite the investment.
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However, the mortgage process isn’t for the faint-hearted, and with lenders tightening their criteria, you need to be able to put yourself in the best position possible. And if you happen to be self-employed, well, this just increases the complexity of the situation.
Self-employed mortgages are notoriously complicated, and you’re required to jump through more hoops than someone who is an employee. However, despite the process requiring a little bit more thought and attention to detail, there are ways you can prepare for a deep dive into your finances and have everything you need to hand to support your application.
This post will examine what you need to help with your mortgage application when you’re self-employed.
Specialist Advice
Before you even think about putting an application in, it is a good idea to talk to an expert in self-employed mortgages to get an idea of the types of mortgages available, if you are likely to qualify and what you are looking at. Forearmed is forewarned, as they say, and taking out a mortgage advisor is a great place to start. You can book an in-person meeting, or specialist advice is available online if you prefer. This can give you a place to start and can direct you on the right path.
ID and Proof
Everyone needs ID to be able to proceed with a mortgage application, so ensure you have a bank statement, proof of address, and a photographic ID such as a passport. On top of this, there are some employment details you will be required to provide, including;
- 2 years of income and account statements
- SA302 forms or an overview of your tax for the previous 3 years
- Ongoing contracts with regular clients, work trends and expectations, etc., are evidence of any upcoming work or proof of gainful employment for the future.
- Any evidence of profits or dividends.
Expenses
All businesses come with expenses, and you will likely need to have proof of the costs you incur as part of operating your business. This is where detailed accounts and bookkeeping come into play. Not only will the lender want to see details of your income, but also how much you need to pay out on a regular basis. Expenses can include;
- Rental payments towards vehicles or buildings
- Equipment costs
- Travel and commute expenses
- Insurances
- Operating costs
- Credit cards and loan statements
How you operate and treat both your personal and business finances will play into the overall decisions lenders make to assess your eligibility for a mortgage. If you have gaps in your income, periods where your business wasn’t trading, or indiscretions when it comes to paying what you owe both personally and professionally, this can impact your ability to qualify for and be accepted for a mortgage. However, once you have all this together, you can move forward with your goal of dreaming of a house, whether you need a self-employed bad credit mortgage or you can boost your eligibility and open up more preferable options and rates with some time and dedication.