Being self-employed can offer a world of freedom and flexibility, but when it comes to securing a mortgage, it can sometimes present unique challenges. Lenders typically prefer applicants with stable, regular income, and the nature of self-employment can make proving that stability trickier. Here are four ways to improve your self-employed mortgage application:
1. Provide Clear and Detailed Financial Documentation
One of the most important things you can do when applying for a mortgage is to ensure your financial documentation is clear and comprehensive. Lenders will want to see proof of income, so make sure you have the following at hand:
Last 2-3 years of tax returns: This includes your tax calculations and overviews, showing your income and how much tax you’ve paid.
Self-Assessment Tax Returns (SA302): These documents from HMRC give a comprehensive overview of your income and taxes paid.
Profit and Loss Statements: If you own a business, providing a P&L statement will demonstrate your company’s financial health.
The more detailed and organised your documentation is, the more confidence lenders will have in your ability to make regular payments.
2. Increase Your Deposit
The bigger your deposit, the better your chances of being approved for a mortgage. A larger deposit reduces this risk and shows lenders that you’re financially stable.
If possible, try to save a deposit of at least 15% to 20% of the property value. This will not only increase your chances of approval but could also help you secure a more competitive interest rate.
3. Consider a Joint Mortgage Application
If you’re married or in a long-term relationship, applying for a mortgage with a partner who has a more traditional salaried income can improve your chances. The combined income from both applicants may strengthen your application, especially if one of you is self-employed and the other is employed.
4. Get Professional Help
Working with a mortgage broker can be incredibly helpful, especially if you're self-employed without accounts. Mortgage brokers can help you identify the right lenders for your situation, navigate the application process, and present your case in the best possible light. They can also assist in gathering the documentation you need to support your application. If you're considering applying for a mortgage and need expert advice, Major Financial Services can help you find the best options.
What Types of Mortgages Are Available Without Accounts?
If you're self-employed without traditional accounts, there are still several mortgage options available to you. Here are some types of mortgages you may want to consider:
Income-Based Mortgages: Some lenders will offer income-based mortgages, where your income is assessed through alternative documents such as bank statements, contracts, and invoices. While these mortgages may come with slightly higher interest rates, they can be a great option for those who can demonstrate consistent income.
Guarantor Mortgages: If you're struggling to provide enough proof of income, a guarantor mortgage might be worth exploring. With this option, a family member or friend can act as a guarantor, using their financial resources to back the loan and help secure approval.
Getting a mortgage as a self-employed individual might take a little extra effort, but it’s absolutely possible with the right preparation. By ensuring your financial documents are in order and working with a knowledgeable broker, you’ll be in a much stronger position to secure the mortgage that works for you.
I hope you find these tips helpful in your journey towards securing a mortgage. Whether you're a sole trader, freelancer, or small business owner, there are options available that can work for you. Feel free to reach out if you need any assistance!
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