Self-employed people can be put off applying for a mortgage, believing the commonly repeated advice that it is more difficult than if you were an employee. However, often self-employed people are eligible for a mortgage, and can achieve their dream of home ownership, with the correct financial advice. Here are some points to bear in mind.
1. Save up for a deposit. The average deposit is 10-20% of the total house price, but look around, as some brokers will accept as little as 5%. However, the stronger the deposit you have, the more chance you will have of securing a mortgage at a good rate.
2. Put your finances in order. Try and pay off any outstanding debts and keep an eye on your spending in the year before you apply for your mortgage, as a lender will need to take into account your regular outgoings.
3. Employ an accountant. Most lenders will want to see up-to-date signed off accounts, dating back at least two years, if not three. However, some lenders will accept one year account histories. If your income is uneven, as many self-employed people will find, don’t despair; ask around, as some lenders will be willing to be flexible in some circumstances.
4. Complete SA302 forms. These forms provide annual tax calculations, and most lenders will need to see copies dating back between one and three years.
5. Seek professional advice. A string of rejected mortgage applications could potentially damage your credit score, and even put off future potential lenders. Do some careful research before you apply. Some brokers will have more experience of dealing with self-employed people, and people with variable credit ratings, than others.
For advice about a low credit score mortgage in the UK, get in touch today.
