MORTGAGES FOR SELF EMPLOYED

Do you have problems getting a mortgage from your bank or lenders?

How we convince lenders on your behalf.	How we assist you.
We make the lenders understand your business type.	We tell you precisely about the type of documents required.
We find practical ways to prove the authenticity of your income/income source.	We guide you on how to keep the finances organised to present to the lender.
We clarify the doubts of the mortgage providers on the part of tax returns.	We tell you the factors that can bring the green light from the lenders. Like good credit history, proof of future business growth etc.

What documents do I need to apply for a Self-Employed mortgage?

The right type of information is necessary to have on this part as mistakes only waste time and increase the threat of rejection. Here is a list of documents that you need to keep ready.

You need documents of two types – ONE – your personal documents TWO – Business documents.

Personal documents.	Business/company documents.
Bank statement.	Business account bank statement.
Income proof (salary taken from the company).	The profit that retains in the business.
Personal tax return (two years).	Business tax return (two years).
Outgoings (All types – debt payments, subscriptions, child care costs, bills etc.)	Business accounts for the last two years.
Proof of deposit (the required percentage of property value).	Profit and loss account and balance sheet.

Applying for a home loan or mortgage

Applying for a home loan brings different situations for the self-employed like bad credit situation. It is better to know what can be the ways to tackle them in the best possible manner. The following two conditions are common in many cases, and if you too have any one of these, then the given information can be beneficial.

Less than two years of self-employment experience

Less than two years of self-employment experience can be a risky condition to get on the property ladder. However, as a solution, if not two then at least one year experience is vital. Certain factors may help you improve the chances of approval.

• Future contracts in hand.
• Documents of tax returns of last year.
• Proof of regular work from renowned clients in the market.
• A considerable profit earned in the previous year with good future possibilities.

The above situations can help you get closer to your desired mortgage deal.

What if I have less than one year’s experience?

To be practical, it is not the suitable situation for you as a mortgage applicant. Whether it is a broker or a lender, all are tied to the rules and ethics of the mortgage industry.

THERE ARE AMPLE REASONS OF WHY IT IS NOT WISE TO APPLY WITH LESS THAN ONE YEAR EXPERIENCE.

• Less than one year experience means you haven’t submitted even your first tax return
• Mortgage is a big obligation with a big amount included. Inadequate experience creates countless doubts on the repayment capacity

Reality is always rational. We, as an unbiased broker, tell you the right time to apply for a mortgage. We never deliver false hopes as that is against our ethics of responsible broking.

How do mortgage lenders check your income?

If you know how your income gets scrutinised by the lenders, you can prepare yourself better.

• The lender asks for the copy of the tax return filed in the last two years.
• The attestation was given by a public accountant to confirm good income if you have bad credit and also the authenticity of income source.
• Details of salary obtained from the company.

You need to make sure that no flaw should happen on any of the above aspects. Every single detail is essential as already for a self-employed; situations are a little lengthy. However, with broking services, you can get your bridge of relief to cover the gap between you and the lender.

How will lenders view my tax returns?

When it comes to tax, the lenders always depend on the Government documents on your tax returns.

• The lenders ask for the SA302 form that contains your tax break down.
• Usually, the lender asks for the three years of SA302 to get proof of a stable income.
• A covering letter from an HMRC (HM Revenue and Customs) official is also required.

The above are the basic requirements, but varied lenders have a different way of treatment. For example, some need a cover letter from HMRC while are fine if you provide the documents and details that you have printed by yourself.

A Broker’s Guide on How to Apply for Mortgages for Self-Employed

The application procedure is always confusing for the borrowers. We at Shine Mortgages assist you on how to apply for mortgages as a self-employed. Have a look at the necessary steps required to start and end the process.

The fund disbursal is the ultimate and evident end of your application process, as this is what facilitates the big purchase.

Advice for first-time buyers

Shine Mortgages is well aware of not only its professional but also moral responsibilities. We offer you information on all the aspects to help you avoid pitfalls. The need for this advice is intense for the first time buyers.

• Keep your personal finances separate from business finances.
• Keep different bank accounts for personal use and business use.
• Keep your financial records neat and spotless.
• Never make multiple applications to many lenders; it causes numerous search footprints on your financial records.
• Hire a broker to find a lender according to your choice and repayment capacity.
• Keep your personal debt-to-income ratio in good condition. 60:40 and 70:30 are the two idol levels.
• Keep your business expenses in control. They should not dominate your monthly and annual profit.
• Always hire a solicitor that is perfect in first-time home buying cases. Hiring anyone may not solve your purpose.

The bunch of suggestions above will always guide you to walk in the right direction while applying for a mortgage. Besides, the most crucial recommendation is whether it is your personal finances or business finances, embrace self-discipline. It will help you all the financial hurdles that cross your way during home buying.

Do I need to register as self employed?

Yes, you need to register as because the formalities for a salaried and self-employed person are entirely different. Besides, to prove the income under the tag of self-employment, you need to have the correct proof. The brokers and the lender that interact with you are surrounded with many rules and mortgage policies. To serve an applicant with his/her earning sources, they need to follow the procedures set by the regulatory authorities. In simple words, you need to legalise your existence with your employment status.

Common problems with self-employed mortgages

Several issues come uninvited with the self-employed mortgages.

• Not easy to avail for new start-up business owners, as a small period of trading proves nothing. Tax return, profit, and income everything is difficult to justify.
• Many lenders do not consider turnover as the income.
• Volatile monthly and annual profit figures badly affect the chances of mortgage approvals.
• It is difficult to ensure timely availability of SA302 form. It usually takes 14 days to obtain it from HMRC.
• Self-employed people get affected by every small and significant change in the economy, which affects their profit-earning capacity. For example, Brexit effects and now Coronavirus have affected all the businesses severely. The salaried people are still getting paid through work from home. It is not the case with the self-employed.

Shine Mortgages is there in your struggle on the mortgage for self-employed to assist you with lucrative deals. Let us know your concern, and we are sure to support you with uncompromised options through our extensive panel of 90+ lenders.

Do's And Don'ts Of Mortgages For Self-employed

We not only see you as our potential customers but also as our financial mate. Therefore, we suggest you regarding what to do or not while applying for the self-employed mortgage.

Do's	DON’TS
Always organise your latest records and accounts. Creating a mess with them is only your loss.	Do not intentionally reduce your income to minimise the tax returns. It will put a negative impact on your financial profile.
It would be better for you to hire a certified accountant to submit a strong mortgage application. The professional can systematise your accounts and tax return nicely.	Do not think that you cannot apply for the mortgage if you are self-employed.
Communicate with us regularly and make familiar us with any sort of compulsion that you are facing during the mortgage period.	Do not try to apply for a mortgage at different lending places because that may hamper your credit score more.

Don't Be Confused Because Your Mortgage Time Starts Now...

How can you prove your income for self-employed mortgages?

One of the most difficult tasks for the self-employed mortgage people is how to prove the income? If you are struggling with the same kind of stress and confusion, here are the ways to help prove income to the lenders we bring.

Payslips and P60

This document is a detailed mention of your salary and the total income in a year. However, it also describes the deductions that happen on the part of the tax. The document can be obtained online.

The above documents are necessary; however, according to the lender, you may need to provide some more details. For example, some mortgage providers want to know to see your personal as well as business accounts. The aim is to confirm if they both are managed separately or not.

Note – It is possible to get a mortgage with a one-year account, but that may not approve a huge mortgage. The future possibilities of the business should be good.

Pitfalls in self-employed mortgage

Sometimes due to ignorance or overconfidence or wrong information, we commit some mistakes that can bring bad news of rejection on a mortgage application. It is better to evacuate before the destruction. Here are some of the pitfalls that may make you regret badly.

• Lenders miss to take all your income into account
  Already it is very difficult for a self-employed mortgage applicant to prove his/her income. Sometimes the mortgage providers have little or no knowledge about the business of the applicant. In that case, they may fail to detect all the income sources. You need to ensure that the lender takes all the income and income types into account.
• You took the first mortgage deal without any comparison
  It is suicidal for the chances of getting a good deal on self-employed mortgages. NEVER finalise the first lender you come across, it will be a biased decision. There are sundry options available in the market, go and explore them. At Shine Mortgages, we never let you go out of choices on the mortgage and provide the maximum possible number of choices.
• Putting no limits on outgoings
  No lender prefers a spendthrift mortgage applicant. It is necessary to put a limit on how you spend money and also where it goes. Sometimes borrowers make careless spending, and that immediately comes under the notice of the mortgage companies. Stop unnecessary expenses and follow an organized budget to prevent any mess.
• Bank statement jokes
  Whether it is about personal bank statement or business bank statements, what you mention at the time of the transaction if very important. Find the sentences such as – ‘money for weekend fun’, ‘money for pizza party’, etc. are considered as the jokes. Always avoid such types of comments while you transfer an amount to others.
• Late payments
  You directly play with the credit score performance when you miss or delay the debt and bill payments. Of course, bad credit self-employed mortgages are available, but why not play safer with less risky options? Pay the bills and debts on time and maintain that practice because it is very important to have a spotless payment record.

A cautious mind can save from the big mistakes, and the tool of information is always the best support to avoid the pitfalls.

How to manage when you have no account, one-year accounts and two-year accounts

It is usually required to have three years of accounts, but not all the applicants have the financial records of this duration. According to the varied conditions, here are the situations that one can face according to the availability of financial details.

Self employed with no accounts	Self employed with accounts of one year	Self employed with accounts of two years
This situation usually happens with the applicant with less than a year accounts. They have not filed their first tax return. It is difficult for the lender to lend money to an applicant with no details on the business finances. The mortgage companies need to prove that they offered funds after the due income assessment. In the absence of no accounts, getting a mortgage can be difficult. You can wait until the first year completes.	This situation is difficult but not impossible. Lenders look for ample reasons to rely on your repayment capacity. In case only one-year accounts are available, some other options can help. If you can show several future contracts and projects, the circumstances can be less bulky. A big deposit may help. Showing association with renowned clients of the industry can also work in your support.	It is the most favourable situation, and you can find several lenders that show interest in your mortgage application. Gather all the information related to your income. Authenticate it with the right type of details and documents. Of course, the factor of big deposit works here also in your favour. However, with less than three years of accounts, it is always a bit tricky to find multiple choices. But certainly, this is something that is not impossible.

Can I get a self-employed mortgage if my income fluctuates?

Fluctuation in the income of a self-employed is a common thing, and you should not think that it makes the borrowing completely impossible. The lenders take an average of your income and accordingly calculate the affordability. However, if there is a drastic drop in earning (yearly or monthly), the situations may get a bit difficult.

The best way to tackle the strain of income fluctuate is to keep a considerable saving. Keeping a saving equivalent to the monthly instalments for six months can make your side stronger on the affordability part. Another factor that helps here is the bright future possibility of stable income. You may have some issues in income in the past year(s) but if the current time or the future shows the possibility of stable income, obtaining funds becomes easy.

Can I get the mortgage deals as lucrative as offered to the employed borrowers?

Yes, you can. There is no said rule that the self-employed people cannot get affordable rates on the mortgage. As a self-reliant person, you can also get cheaper deals with choices of lenders. It is true that as compared to the salaried people, the applicants with their own business face difficult conditions to prove their income. However, once that part gets over smoothly, there is no discrimination on the part of the rate of interest or repayment plans. The prime importance is always to the repaying capacity.

Three factors that help you attain the best deals on self-employed mortgages are –

• Hefty deposit
• Good credit score performance
• Satisfying repayment capacity

Things that you should not do in your business before applying for a self-employed mortgage

Sometimes due to ignorance, the mortgage seekers do things in their business that are not acceptable in the lending world. That can reduce the chances of mortgage approval, but if you know about them in advance, a better strategy can be created to avoid any last-minute chaos.

• Do not change your business structure
  Due to varied reasons, sometimes businesspersons change their business structure. But such things before applying for a mortgage can spoil all your chances of approval. Never do that because, with a new design of your business, you need to make new registration with the new changes. That in some way, nullifies the previous business accounts.
• Do not take a break from business
  Your business needs to be in action while applying for the mortgage. The mortgage companies never take the applicants seriously because they cannot consider the businesspersons who are not running their business with regularity. Continue with the same pace and maintain financial stability.
• Do not make a joint venture with a company in loss
  Your business decisions surely come on the dissection table of the lenders. You may have your plans to launch a new joint venture but if the company you are planning with for a mutual agreement is already in a big loss, then stop it now. It can be a destructive decision for your mortgage possibilities.

Whatever lender you choose to get the self-employed mortgage in the UK, the above conditions in the business can always create issues in your borrowing journey. Better is to do the least possible or NO changes in your business. Regularity and stability of business are more important than anything.

Some useful advice for all the first time buyers

Every first-time buyer gets anxious about the success of the mortgage application. With some useful advice, one can carry a clear picture of how things work. If you are a first-time buyer, here are some suggestions.

• Always use the calculator to make rational calculations – It is not wise always to reply on your subjective estimations. Use advanced financial tools to make necessary calculations about a mortgage. They give a precise outline of overall and monthly costs. Do not base the decision on your estimations that can be incomplete. Make use of a self-employed mortgage calculator as part of your borrowing strategy.
• Keep a knowledge of the latest market trends – This point has become specifically important after covid-19 chaos all across the world. The UK mortgage market is certainly back, and the speed of revival is also satisfactory with an increase in the mortgage approvals. At the same time, a considerable increase has happened in the stringency practised by the lenders on the part of income assessment. Many other changes are there, and you should know about them.
• A record of regular work helps in easy approval – Keep a record of your business regularity because this is of utmost importance for the mortgage companies. It also includes the record of repeated clients because they show good business relationships. The lenders can see that you manage your business and professional relations well. The factors that show the strength of a business should come into the notice of the lenders.
• Significant deposit amount – Perhaps there is no need to explain the importance of deposit for a mortgage borrower. Different lenders have different rules, from your side, try to save the maximum amount. A usually advisable percentage of the down payment is 25% because that covers any weakness on the part of repayments capacity. For example, those with only two years of accounts should certainly consider this suggestion.

Shine Mortgages is always ready to provide the best services as a self-employed mortgage broker. You can come to us for any of mortgage requirement, and we are sure to give the due assistance with our expert team. It is not just a promise but a duty that we do as our prime responsibility.

Why choose Shine Mortgages?

As the self-employed mortgage broker, we keep control of every skill that is necessary to get you a good deal. Here is why you can, or you should choose us.

• We bring the widest choice of deals for you
• Our suggested deals facilitate reasonable tax deduction
• We are 24x7 available with most lucrative deals
• We have mortgage calculator, stamp duty calculator and repayment calculator
• We take no charge or fee from the applicants our share comes from the lender

Rest you can know only when you will reach to us online through our website or call. We are there for you, ALWAYS.

Unlike a self-employed mortgage advisor, we present a bigger picture of the mortgage market and suggest you on the aspects that can positively increase your approval chances. The only aim of our presence is to facilitate the best possible deal for you.