Mortgages for self employed and contract workers should in our opinion be no different to arranging a mortgage for an employed individual. The fact is that banks find it difficult to dedicate the time to understand varying businesses and clever accounting which can make the role of a mortgage broker even more valuable.
We have a number of self employed clients and have built up a knowledge of criteria and banks niche areas allowing us to quickly source the right deal for you and your circumstances.
Many high street banks have rigid criteria which is listed below;
- Many lenders need 3 years of audited accounts which demonstrate profit. This restricts access to those who have a short trading history or are in a period of growth.
- Income is generally taken from your declared taxable income which is detailed on your SA302s (the return you receive after submitting your self assessment). As such, this limits the use of viable tax planning such as director loans.
- Very few lenders will use net or retained profit with affordability based purely taxable income drawn from the company penalising those that don’t need to draw all of their profits.
- The number of lenders lending to those on contracts is limited - generally there needs to be a solid track history over a number of years. We will analyse your figures and quickly match you to the right lender.
We have encountered a variety of scenarios and can usually tailor a mortgage regardless of the complexity of your income.
A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.