Self Employed? You CAN Get a Mortgage.

These blogs and the information contained in them may no longer be current and therefore much of the information/figures quoted could be out of date and shouldn’t therefore be used as an indication of the current situation. If you require any further clarification please contact Derngate Wealth.

Your home may be repossessed if you do not keep up repayments on your mortgage.

There has been a steady rise in the number of self-employed workers in the UK. According to the Office for National Statistics (ONS), over 4.8 million people are self employed. This is a rise of 1.5 million people since 2001.

There are a number of benefits to being self employed, such as being your own boss, having control of your work life balance, having time off, flexible working hours and locations…but there are also so drawbacks to working for yourself. The main risk of course is that you are no longer in receipt of a guaranteed income (although some would argue that there is also no risk of being made redundant!). However, guaranteed income is one of the main criteria for obtaining a mortgage offer, so many assume that being self-employed means they won’t be able to buy a property.

Many people who are self-employed are amazed to discover that they do have options, even if they have a small deposit.

There are some new lenders that have entered the market in recent years and this has increased competition and resulted in an era of more relaxed lending criteria.

The market has moved on so much in the last six years that there are even lenders that would consider someone that had a default or CCJ over three years ago and with just a 5% deposit. However, it’s worth remembering that interest rates are typically higher for applicants, averaging 5.18% APR for a two year fixed deal compared to 2.9 per cent for an applicant with a bigger deposit and a clean credit history.

If you have the desirable 40% cash deposit and two or three years of accounts for your business, there are even more options available to you.

The average mortgage loans are four to five times income, although some lenders will consider six times, and lenders will even consider applicants with just one year’s trading history, though accounts should be detailed

If you have been self-employed for over a year and have a clean credit record, you may qualify for a 95% loan to value (LTV) mortgage with a 5% deposit, but you will need to have a clean credit record for the past three year.

If you would like advice on buying a property if you are self employed, contact Derngate Wealth today.

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