What is a Self-Employed Mortgage?

Being self-employed can make it hard to get a mortgage. Here at Finance Advice Centre, we are whole of market advisors. This means we have access to all lenders to get you the best deal no matter what your situation.

What about the length of accounts?

We have the options available to gain a mortgage for you with less than 1 year’s accounts. This is possible if you are in a profession such as a doctor, solicitor, dentist, architect, or vet to name a few.

What counts as being self-employed?

You will be viewed as self-employed by lenders if you own more than 20-25% of a business from which you earn your main income. For example, you could be a sole trader, a contractor, or a company director.

How do you get a self-employed mortgage?

In theory when you are self-employed and looking for a mortgage you will have the same options as anyone else and you will need to pass the lender’s affordability tests like every other borrower. However, without an employer to vouch for your wage self-employed people need to provide much more evidence of their income than other borrowers.

What do you need to provide for a self-employed mortgage?

As proof of your income when you apply for a mortgage typically you will need to provide: Two or more years certified accounts (as previously mentioned we work with lenders who will accept your application with less than this but in general this is the standard) SA302 forms or a tax year overview from HMRC for the past two or three years

What are self-certification mortgages, and can you still get one?

Self-certification or self-cert mortgages were designed specifically for self-employed people and allowed them to self-certify how much they earnt within any given year and no need to provide any evidence.

Do self-employed workers pay higher mortgage rates?

Self-employed mortgages aren’t necessarily more expensive, as long as you can provide enough suitable information about your income you can qualify for the same mortgage deal as someone with a similar salary in a permanent, full-time job. The mortgage rate you receive is more likely to depend on how much deposit you have saved to put down and your credit rating.

How can you boost your chances of getting a self-employed mortgage?

As with any mortgage applications there are steps you can take to improve your chances of being accepted. These include: Save as much as you can for a deposit Check your credit rating and do what you can improve if it’s too low Correct any mistakes on your credit report

How can you find the best self-employed mortgage deals?

The best way to find a competitive mortgage is by shopping around as much as possible and comparing deals from different lenders. Remember when you are comparing deals to factor in the cost of any fees as you could find it is cheaper to go for a mortgage with a higher interest rate but a lower fee.

How does the set-up of your business affect your mortgage chances?

The structure of your business can influence how lenders view your income when you are applying for a mortgage. See how lenders view each of the three main business structures below.

How much can you borrow for a self-employed mortgage?

Each lender has different criteria and policy on how much they will lend to a borrower. In this case it doesn’t really matter whether you are employed or self-employed, as long as you meet the criteria set out by the lender you can typically borrow up to 4.5 times your annual income.

Is it more difficult to get a self-employed mortgage as a contractor?

Applying for a mortgage as a contractor can be quite tricky sometimes. In part this is because lenders will have different criteria on what defines a contractor, which will in turn dictate how much mortgage you can get. Typically, you are either an employed person working on a fixed or short-term contract, or you are self-employed and work through one main company.

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So ... how can we help?

Buying a financial product such as a mortgage can be the biggest decision made in our lives. It is for this reason that impartial advice is critical from qualified advisors.

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Right to Buy Mortgage with Bad Credit

In 2015 a number of changes were made to the Right to Buy scheme which has made it an appealing choice today for many potential buyers. If you have had incidents of bad credit in the past, it could make it more challenging to get a Right to Buy mortgage, but certainly not impossible. Lenders use their own complex scoring systems to determine whether you qualify for a mortgage based on a wide range of criteria. This can span from your affordability every month to your credit history.

At Finance Advice Centre our professional team can help you find specialist lenders who are more likely to accept your application for a Right to Buy mortgage with bad credit. Even if you have been turned down previously by high street banks or building societies, it is still possible for you to secure a Right to Buy mortgage deal.

What is the Right to Buy mortgage scheme?

The government’s Right to Buy scheme was first introduced in 1980 and was created to give council tenants the opportunity to buy the home they rented with a substantial discount. Whilst previously there used to be restrictions on the amount of discount a tenant could receive in the scheme, the changes over the years have seen significant increases in discounts. London boroughs currently have the highest discount available of up to £75,000-£100,000. The discount available to a tenant will depend on the valuation and location of the property at the time you make the application.

Am I eligible for the Right to Buy scheme with bad credit?

To qualify for the Right to Buy scheme you need to have been a public sector tenant for three years or more. A public sector tenant refers to anyone who is living in a local council or housing association, but the three years does not have to have been spent in the same property or on a continuous basis.

Whilst in previous years borrowers applying through the Right to Buy scheme may have been turned down because of bad credit, affordability, or self-employment, the changes over the past few years to lending criteria and the new specialist providers entering the market mean more tenants can now benefit from the scheme. It is still possible to be accepted by specialist providers for a Right to Buy mortgage with bad credit if you have any of the following in your history:

Recent defaults
Late payments
Low credit score
Recent CCJs
Credit issues that have built up in the last 12 months
Debt management plans

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Your Advisor will find the best option for you and help arrange things. You then sit back and relax while we do the rest.

Ready to assist you.

Choosing a financial product or service, such as a mortgage, remortgage, loan or insurance can be daunting and your choice is a decision you need to get right. For this reason, it is vital that you get impartial advice from competent and qualified advisors. Whether you are a first-time buyer, looking to remortgage, hoping to remortgage or even buy a property to let, needing a loan or insurance this is where our advisers excel.

Be reassured that our aim is to guarantee reliable financial advice appropriate to any individual that makes contact with us. Through our network of contacts, we have access to thousands of financial products, from mortgages to loans to insurance, so we are confident that we’ll find one to suit you.

How much can I borrow with bad credit?

When working out how much a person can borrow, the first thing most lenders will look at is your ability to afford to pay back the loan. This means they will need to see your income or incomes for a joint application, as well as your monthly outgoings and other credit commitments, such as car finance. Also, a lot of lenders will consider your maximum income multiple. In most circumstances this will be 4x your income, but some will allow 5x or even 6x your income, depending on the provider.

Lenders are now using more diverse methods to assess the extent to which you can afford a potential mortgage. The best way to prepare is to discuss your financial situation with one of our expert advisers.

Our team has extensive experience in helping people with bad credit get accepted for Right to Buy mortgages. We can guide you on your next steps to finding the most suitable deals for you, plus any further help with the application process itself.

As a mortgage is secured against your property, it may be repossessed if you do not keep up the mortgage repayments. Think carefully before securing other debts against your home.

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We had a long journey buying our first home together and recent pandemic events didn’t help matters. Every step of the way, our advisor Steve was supportive, positive and we had every confidence in him. He was able to arrange a good deal for us and we were able to move into our dream house this autumn.

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I used George from the finance advice centre to get my mortgage, and he was nothing but amazing! Talked me through every step, always easy to get hold of ! And got me a brilliant product I would highly recommend him, just brilliant 5 stars from me

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