Applying for a mortgage as a self-employed individual can be difficult. Without payslips to prove your income you’ll need to present a lot more documentation to give lenders the confidence to approve your mortgage. A self-employed mortgage can offer this credibility and security that will see mortgage lenders approve your application.

To have your self-employment mortgage approved, you’ll need to provide documentation for a range of financial factors, including:

• Tax calculations: a print-out from HMRC, or your accountant’s filings.
• Financial accounts: this will need to cover the recent complete tax year and, in cases where retained profit and dividends are to be taken into account, the previous year as well. Be prepared to answer any questions on your accounts, including dips in profit.
• HMRC tax year overview

Once you’ve spoke to one of our mortgage brokers, we can quickly provide you with an Agreement in Principle (AiP), confirming that you could borrow the amount you need.

The set-up of your self-employment will affect the way in which lenders interpret your income – impacting on the lending amount you will be offered. Examples of this include:

Sole traders: this is relatively straightforward. A mortgage lender will be able to calculate the amount you can borrow based on the profits you earn.

Partnership: your mortgage lender will need to see how much each partner shares of the profit.

Limited company: make sure your mortgage lender takes into account both the salary that you pay yourself as director and the dividend payments you receive, to get the maximum amount possible.

There are several advantages to securing a mortgage for your property. This includes: approval for a mortgage that you may otherwise struggle to achieve and higher borrowing amounts – if your mortgage broker takes into account the retained profits of your business, you could borrow much higher amounts than typically achieved from a salary.

When applying for a mortgage, most lenders will class you as ‘self-employed’ if you have around 20% or over share of the business that provides your main income. You may also not have payslips to prove your income – in these cases a self-employment or contractor mortgage will be the best way to get the confidence of mortgage brokers to secure your financial solution.

You will need to be able to prove your income to a lender to qualify for a mortgage and in some cases this will require up to two years of accounts. Without this you will not be eligible for a mortgage. Many mortgage lenders will insist that these accounts have been kept by chartered accountants, to increase their credibility. Not all mortgage lenders take into account retained profits, so it’s important to work with your mortgage broker to find a lender who does if this is an avenue you’re relying on.

At Hawke FS, we understand that for individuals, the process of acquiring a mortgage can be more stressful than usual. That’s why our expert consultants work exhaustively to ensure that the process is made as simple and hassle-free as possible. You can find out if you’re eligible for a mortgage quickly, reducing time wasted, and work with us to get the maximum possible amount borrowed. Contact our advisors today to learn more.