Don’t let self-employment stand between you and your dream property.

Yes, owning a limited company will not stop you from obtaining a mortgage.

Getting a mortgage as a business owner can be challenging because lenders often perceive self-employed borrowers as high-risk. One reason for this is that self-employed individuals tend to legally minimise their earnings to reduce tax liabilities. While this is a common practice, it can have drawbacks when applying for a mortgage, as it might make it harder to demonstrate a stable and sufficient income.

In summary, obtaining a mortgage as a business owner can be difficult due to lenders’ perception of self-employed borrowers as high-risk and the potential challenges in showcasing a stable and adequate income. To increase the chances of securing a mortgage, it’s crucial for self-employed individuals to prepare thorough financial documentation and consult with a mortgage adviser to explore their options.

Mortgage companies assess self-employed applicants differently than salaried individuals when determining their eligibility for a mortgage. Generally, lenders will examine your net profit over the past two to three years if you are a sole trader. They will then calculate an average from those figures to establish your earnings.

In summary, mortgage companies typically evaluate self-employed applicants by looking at their net profit over the past two to three years and calculating an average income from those numbers. It’s essential for self-employed borrowers to prepare their financial documentation carefully and consult with a mortgage adviser to better understand the mortgage application process and their options.

Self-employed mortgages are not inherently more expensive. As long as you can provide sufficient information about your income, you may be eligible for the same mortgage deal as someone with a comparable salary in a permanent, full-time job. The key is to present a strong financial profile and demonstrate a stable income, which will help you secure a competitive mortgage rate similar to those available to salaried borrowers.

In summary, self-employed mortgages do not necessarily come with higher costs, as long as you can furnish adequate income documentation and meet the lender’s requirements.

Proof of income for self-employed individuals applying for a mortgage typically involves providing lenders with SA302 forms. These forms serve as evidence of your self-employed income. Lenders usually prefer to see three SA302 forms to assess your earnings. If you have filed your tax return online, you can obtain your SA302 forms by printing them from your HMRC online account. If you submitted your tax return by post, you will need to contact HMRC to request the forms, which may take up to two weeks to be delivered.

In summary, proof of income for self-employed borrowers seeking a mortgage often consists of providing three SA302 forms. These forms can be obtained from your HMRC online account or requested from HMRC if you submitted your tax return by post.