Joint Mortgage Self-Employed
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Joint Mortgage Self-Employed (Part 1)
How does being self-employed affect your eligibility for a joint mortgage?
It doesn’t affect it much, as long as you have been self-employed for two years. Even if you just have one year’s accounts it’s something we can look at. That’s not a problem. Give us a call and we can discuss the right options now and how to go forward.
What documentation is typically required for self-employed individuals applying for a joint mortgage?
It entails a little bit more than if you’re employed. I would need a copy of your SA302s, which are also called tax computations or tax calculations, depending on the software your accountant uses.
I also need the two supporting tax year overviews. If you are a limited company, we would ideally need two years’ company accounts as well – and most lenders ask for three months business bank statements, too.
Are there any specific requirements or restrictions for self-employed applicants considering a joint mortgage?
Having two years’ accounts history would be great, and ideally seeing increasing profits over the latest two year period. However, some lenders are happy to base it on one year’s business accounts.
If you’ve been in that line of employment for a while, lenders will have more confidence. So if you’re employed in a certain job role and then went self-employed, you have a history and relevant experience in that sector. In that case some lenders would be happy just on one year’s accounts.
How can self-employed individuals improve their chances of being approved for a joint mortgage?
It’s being organised, really. Having two years’ accounts history is important, and ideally your net profits are increasing. Some people don’t like to do their tax returns until the very end of January, but it’s very helpful if you can get them done beforehand and have them ready.
Make sure your business bank statements are all up-to-date and looking spick and span. Get prepared as you would if you were employed.
Can self-employed applicants include their spouse or partner in a joint mortgage application?
Yes, of course you can. Two lots of incomes are a lot better than one. Even if you and your spouse are both self-employed, whether you’re in the same business or different ones, we can include both incomes.
If one of you is self-employed and one of you is employed, again, we can use all of that income.
Are there any additional considerations for self-employed individuals when applying for a joint mortgage compared to employed individuals?
If you’re a limited company, some lenders use your salary and dividends, and others may use salary and net profits. If you have some retained net profits in the company, that’s something we can use – and it could mean a lot higher mortgage affordability for you.
Even though you need to provide lots of documents as evidence for that, it can be very beneficial.
What are the advantages and disadvantages of applying for a joint mortgage as a self-employed individual?
The disadvantage is if you haven’t been self-employed for very long. If you’ve only been self-employed for six months, you haven’t got the necessary income evidence then, it’s unlikely you would be able to get a mortgage. You’d have to wait until you’ve got at least a year’s history
It’s all about timing. If you’re looking to get a mortgage in the near future, staying employed may be more beneficial for you. But if you did take the plunge to being self-employed, having a two year history is great and hopefully again, you’ll have increasing profits there.
How can self-employed individuals navigate potential challenges or obstacles when applying for a joint mortgage?
It’s about getting all your documents ready. Make sure the bank statements are up to date and you haven’t got any large expenditures going in and out of the company.
Then, when an underwriter is looking at the bank statements it correlates with the income you’re getting. Again, hopefully you would have had an increase in profits in the second year.
Often lenders use an average of the last two years, but some will even take the latest figures. Having a better second year could be beneficial.
Because everything’s done on an individual basis, give us a call and we can go through everything and try and maximise any mortgage options for you.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
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Joint Mortgage Self-Employed (Part 2)
What factors do lenders take into account when assessing the affordability of a joint mortgage for self-employed applicants?
Ideally, you’ve got an increase in profit each year. If not, or there are any anomalies like a large expense, as long as it’s explained that’s absolutely fine. Perhaps you’ve just bought a vehicle or equipment – your accountant can just make a note of these things.
It’s natural for a business to grow, so ideally each year you would be increasing your net profits. Obviously sometimes you do need to pay out for new bits and pieces for the company.
Aside from that, as with all mortgages, lenders take into account any loans or credit cards in your name – both for you and your partner if you’re buying together.
Are there any specific types of joint mortgage products designed for self-employed individuals?
Not really. Some lenders are better with the self-employed than others. It would be down to me to find you the right option for your self-employment scenario.
Can self-employed applicants benefit from any government schemes or initiatives when applying for a joint mortgage?
There aren’t really any schemes at the moment, but if the government does bring in something else, like a replacement for Help to Buy, I’m sure that would benefit the self-employed as much as anyone else. We can have a look at those scenarios when they come up.
Some lenders do have First Time Buyer options, and we can look into whether that could be beneficial for you. Again, it’s all done on an individual basis.
What should self-employed individuals know about the income assessment process for a joint mortgage application?
Obviously, you need to have your documents submitted. If you have an accountant they would do that all for you.
Usually your accounts can be up to 18 months old, but past that, you would need new up-to-date accounts. I have had some people that don’t actually submit their accounts until January, but they needed to submit these early because otherwise they would exceed that 18 month period.
How does the length of self-employment history impact the likelihood of being approved for a joint mortgage?
Ideally, if you’ve had an established business and each year the business has clearly been increasing, that’s really good for stability. Some lenders like to see three years’ history.
But some people who are new to being self-employed might only actually have one year’s accounts. Sometimes the first year isn’t great. You may have done well but it’s not as high as it could be.
Having that history there supports the case so that the underwriters are more confident with your self-employment income. So the longer you’ve been self-employed, the better.
Are there any self-employed friendly lenders or brokers you would recommend for joint mortgage applications?
Well, of course, I’d recommend myself. I love self-employed people, and it’s nice being able to get them on the property ladder or supporting them to move house.
Some lenders are more beneficial, as I mentioned. Some lenders will take net profits as well as salary, which can be a massive boost for affordability. That’s particularly interesting.
Some will just take recent years figures if there’s an upward projection, but not if it’s dramatically different – such as £100,000 one year and £200,000 the next. If there’s a steady projection, there’s no reason why they won’t take the latest figures, which is really beneficial for self-employed people.
Can self-employed applicants include income from multiple sources in a joint mortgage application?
Yes, they can. You can be employed and self-employed in two jobs, and that can be absolutely fine, or if you have child benefits or anything like that, we can add those in.
If you’re buying with your partner, we can use their income as well. It all can be added to the pot.
What else do we need to know about joint self-employed mortgages?
Everybody is individual and has their own circumstances and business set-ups. So just give me a call and tell me what the situation is. I always like to come up with a solution for you.
Even if the profits have gone down slightly in the recent year, there’s always a story behind that. Just let us know – we can see what we can do for you and hopefully get you moving.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
