You are here: Home - Mortgages - Remortgage - How to -

How to get a mortgage if you’re self-employed

Written by:
Millions of Brits are now working for themselves, but the freedom of being your own boss could be a roadblock when it comes to securing a mortgage.

According to figures released by the Office for National Statistics (ONS) yesterday 4.6m Brits are now self-employed, an increase of more than 700,000 since the peak of the financial crisis in 2008.

As a growing number of people choose to work past retirement age and a sluggish job market leaves traditional job opportunities thin on the ground, just 23 per cent of people who were self-employed in 2009 have since returned to full employment status.

Despite the rise in self-employment, banks can be reluctant to lend money to those who work for themselves. While challenges do exist – of which proving your income is just one – there are steps the self-employed can take to increase their chances of securing a mortgage.

Charles Haresnape, managing director of mortgages and commercial lending at Aldermore, says:

Do your homework

Before you start the buying process, approach a mortgage lender and find out firstly if you qualify for a mortgage and secondly how much they will be willing to lend you. This will ensure that when you start house hunting, you don’t waste time looking for places that are out of your price range.

Provide as much of your employment track record as possible

Most lenders specify that they need to see three years of income history. Make sure you take along as much evidence of your previous work history, and your self-employed history as possible. This will greatly improve your chances as the lender will be able to make a more informed judgement and this will save you time.

Improve your credit score wherever possible

In the current climate, some lenders will shy away from what look like riskier prospects, and anything you can do to improve your credit score will make your application more attractive. Minimise your debt levels as much as possible before applying, and make sure to keep up-to-date records should you be asked to supply any additional information.

Raise a larger deposit

The smaller the mortgage you are taking out the more likely it is you will qualify for it. Reducing the Loan to Value as much as possible by having a larger deposit is highly advisable.

Have a savings buffer

Having a contingency fund for any obstacles you may face in the future will reassure the lender that you are a responsible prospect.

If in doubt, ask

Applying for a mortgage is a huge commitment and if you have any concerns or are unsure talking to an independent mortgage adviser can be very helpful. Not only can they answer any questions you have about the process, they can save you time as they will be aware of which lenders are most likely to support applications from self-employed workers.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

It’s time to get your finances in shape, and moving your cash savings to a higher paying deal is a good plac...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The experts’ guide to sorting out your personal finances in 2021

From opting to ‘low spend’ months to imposing your own ‘cooling-off period’, industry experts reveal t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week