Remortgage When Self-Employed
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Remortgage When Self-Employed
Stacey Gulliver explains how remortgaging works when you are self-employed.
Is it harder to remortgage if you are self-employed?
Sometimes, but remortgaging is often a lot easier because you’ve already got a mortgage. It could be that we just actually stay with your current lender for a product transfer rather than source a new deal with a different lender. Sometimes that works out a lot better – especially if you are self-employed or newly self-employed.
How long do you have to be self-employed to remortgage? Can you remortgage if you’re newly self-employed?
In an ideal world, you would have two years’ self-employment, with documentation to prove that. That’s how we can move forward with most lenders. But if not, we can usually do something.
Some lenders are happy with one year’s accounts, so that’s not an issue at all. If you’re newly self-employed, it depends how recently you changed. If you’re in the same line of work, that can be acceptable to a lender- for example you’re an electrician, you were employed and then you decide to become a self-employed electrician. But still, ideally, you need at least one year’s accounts.
How does the self-employed remortgage process work? Are there any differences here?
Not really. You don’t get worse rates for being self-employed – whatever rates they give employed people, they give to self-employed people too.
When you’re remortgaging, you’ve already got a mortgage. It could be that we stay with your current lender with a product transfer. There’s no income evidence needed for that, which is useful if you’re newly self-employed.
But again, we can check the options with different lenders, we can look at remortgaging as long as you’ve got the documentation – your SA302s and tax year overviews, to prove your income.
Can you remortgage with no proof of income?
This is a bit tricky. You couldn’t remortgage to a different lender with no proof of income unless, say, your partner is on a lot of money and it just was solely done on their earnings. You could still go on that mortgage in joint names, but with no income used for you.
It’s an unlikely scenario for most people – they probably would need two lots of income. If you have no proof of income, it’s probably best to stay with your current lender and do a product transfer.
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Can I remortgage if I have bad credit?
It depends how bad the credit is. It’s possible to remortgage, but you’ll probably be paying a higher interest rate. Credit scores do play into this, so it’s really important to try and keep on top of things.
Again, if you have a mortgage and your credit happens to have got worse or something has happened recently, it could be possible to stay with the current lender.
However if you have missed various mortgage payments, perhaps the lender would not be happy with that scenario. Everything is looked at on a case-by-case basis.
Can a self-employed person be declined a remortgage?
If you have bad credit and a history of not paying that mortgage in full each month, there could be an issue. The lender might not allow a product transfer to stay with them. But again, everything is done on a case by case basis.
If you were looking to remortgage to a new lender, there could possibly be a decline. But I would like to think we could sort out a product transfer with the current lender.
How can I better my chances of a good remortgage as someone who is self-employed?
It’s preparation, preparation, preparation. If your accounts are due, get everything ready to send to the accountant. We’re recording this in February 2025 – if you’ve had a good year for 2024/2025, get those accounts as soon as possible so you’ve got the most up to date figures for the lender. Don’t leave it until 31 January next year as some people do.
The documentation we need are your SA302s, which are also called tax calculations and tax computations – plus you need the supporting tax year overviews.
Also, make sure your business accounts look good – avoid going into your overdraft. If you’ve got any loans or credit cards that can be paid off, do that to get everything looking spic and span for the remortgage checks.
If you’ve had two really good years, you could potentially increase your borrowing when you come to remortgage. It could be a perfect opportunity.
What are the benefits of remortgaging?
Well, hopefully, better rates. So if you remortgaged two years ago on a two year fix, the rates will hopefully be slightly better for you now. That’s what most people want when they remortgage.
It’s also an ideal time to make changes. It could be that you want to take some money out for home improvements or debt consolidation. That can all be done at the same time.
If you want to make changes, such as extending the term of your mortgage to bring the repayments down slightly, that’s something we can look at as well. Again, it might be looking at a different lender.
It might be that your current lender hasn’t got the best rates available and moving to a different lender could get a better rate, which will reduce your mortgage repayments.
How can a mortgage broker help here? Is there anything else we need to know?
Every remortgage is done on a case by case basis because everybody is unique. Sometimes people come to me saying that I’ll never get them a mortgage.
However, there are lots of different lenders we can look at and they all have their own criteria. You might not think it’s possible, but often we can make the impossible happen. We can get you that mortgage or remortgage to a different lender if needs be.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
