Being self-employed and financing your first home or finding a remortgage can be a challenge for mortgage applicants. That’s why at Limetree Financial Services, our team is committed to providing impartial and expert financial advice to sole traders, freelancers, company directors, partnerships, and contractors, zero-hour contracts, and anyone else who is self-employed.
How does a self employed mortgage broker differ from another broker?
As a self-employed individual, your financial situation doesn’t compare to the safety of a regular and automated employment payslip. However, there is no such thing as self employed mortgage deals. Most lenders are going to expect self-employed applicants to meet similar criteria as any other mortgage applicant.
With no fixed annual salary or PAYE-based slip to confirm your earnings, self-employed individuals can find it challenging to provide the necessary information for their application. In addition, what you can afford to borrow and how lenders are going to assess your finances can be a tricky exercise without the guidance of an expert self-employed mortgage broker.
As a result, a broker who understands your situation and the mortgage challenges you face can provide support throughout the mortgage comparison and application process.
In theory, every mortgage applicant has access to the same rates and mortgage deals. In practice, however, each lender views and assesses your income and financial situation differently, when you are self-employed. With no payslip to confirm your annual salary, it is up to the lender to define which income requirements they require for your mortgage.
As self employed mortgage assessments go, lenders are, in essence, left to set their own criteria. It’s precisely where a self employed mortgage broker who knows lenders’ approaches and requirements can make a huge difference.
A mortgage broker who understands self-employed needs
Our team at Limetree Financial Services support a variety of self-employed individuals in their search for the right mortgage deal:
- Zero hour contract
- Taxi drivers
- IT and design contractors
- Other contractors
- Foster carers
- Construction Industry Scheme contractors and subcontractors
- Sole traders
- Company director
- Other self-employed professionals
As a result, our team of self employed mortgage brokers know and understand that no two self-employment situations are the same. We appreciate that the mortgage application assessment process can be long, tenuous and stressful when lenders fail to follow a unique set of criteria. Therefore, we share our experience of how a variety of lenders proceed with self employed mortgages.
We believe that the best self employed mortgage broker for borrowers is a broker who knows how lenders from both high-street building societies and banks and small lending companies assess applications. As a result, we help you review your mortgage application accordingly and find the right mortgage deal for your unique self-employed situation.
A self-employed mortgage broker for complex incomes
Your Limetree self-employed mortgage broker evaluates individual mortgage deals to make sure you can display your self-employed income clearly. Indeed, we know that showing the available income from your company account, dividend incomes, retained profits, and annual profit can be a tricky exercise. Therefore, working closely with a self employed mortgage broker can help you to document and organise your earnings, hence providing proof of income for the consideration of lenders.
Obtaining an SA302 form as proof of income
Lenders seek protection for their capital, which is why they require proof of income with all mortgage applications. Self-employed candidates will need documented and verified evidence, which your self employed mortgage broker will clarify and check before submitting your mortgage application. Lenders tend to prefer HMRC evidence such as the SA302 form to validate your income and affordability.
The SA302 form is provided by the HMRC and displays your self assessment tax calculation. It acts as evidence of your declared income for the specific tax year and shows both your income tax and your NI contributions. The SA302 form can be obtained for up to four years of tax overview.
Lenders can ask either for originals provided by HMRC or a printed copy prepared by the self-employed applicant or their accountant. You can rely on a self employed mortgage broker to advise you on the preferred format.
Self-employed mortgage applicants can print out an SA302 form by accessing their self assessment records online. Alternatively, they can request an original by calling the dedicated Self Assessment helpline or writing to the HR Revenue and Customs, quoting your Unique Taxpayer Reference and National Insurance number.
Other proof of incomeSome lenders request to see your full account for one, two, three or more years of income. As a rule of thumb, most lenders need an average of three years’ worth of income, but this isn’t always the case. However, your income figure can vary dramatically, depending on whether lenders consider dividend income, retained profits, a short track record, or even only one year’s account. There is, unfortunately, no established rule on how lenders evaluate your income. A self employed mortgage broker can help you identify the most effective way to calculate and demonstrate your affordability.
What to include in your self-employed mortgage application
A self-employed mortgage broker will help you define the most reliable and useful evidence and calculation of your income for each lender:
- Dividend income is generally perceived as income by most lenders.
- Some lenders consider net profit rather than salary and dividends.
- Specialist lenders will review retained profits.
- Lenders can demand to see an average of your income over a few years, last year’s accounts, current year’s accounts, etc.
Considerations such as your credit score are also substantial to your application.