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.

First Time Buyer Mortgages

Bad Credit Mortgages

Self Employed Mortgages

Remortgages

Buy-to-let mortgages

Expat Mortgages

What is a Buy For University Mortgage?

The Buy for University Mortgage allows students to buy a house to live in with the support of family and then rent out rooms to cover the cost of the mortgage. It is designed to allow a student, with the help of parents, step-parents or a grandparent to buy a property of their choosing rather than renting, and they can derive enough income by renting to cover the bulk of the monthly mortgage repayments.

Support for this type of mortgage is needed from a family member(s) in the form of a guarantee to pay any shortfall in the monthly mortgage amount after rental income has been assessed. The guarantor won’t have any legal rights to the property, with the deed being in the name of the person studying.

Why choose a Buy For University Mortgage?

With around 2.6 million students attending University each and every year at 119 Universities in England and Wales, there are opportunities for many to make their time at university not only an opportunity for study but also for property investment.

Instead of paying out to private landlords or expensive university-owned accommodation – around 50% of students are thought to be living in private landlord accommodation – you can avoid a ‘dead money’ situation by getting a mortgage on a property. The standard of rented accommodation for students can be variable and with average rents tending to rise year on year, there are many advantages for students to buying a property through a Buy for Uni Mortgages including:

Becoming a homeowner at the same time as studying full time
Avoiding paying high rent for often poor accommodation
Rent spare rooms in the house to friends or fellow students with the the rental income covering the mortgage payments
Student could have lower or no costs payable for their own accommodation for the time they are at University
Potential income while at University with a surplus after the mortgage has been paid
Avoid stamp duty as treated as 1st time buyer
Accommodation of your choosing and better living standards during your time at University
Enable you to choose your own housemates who can rent from you

How can we help?

Going to university can be a daunting time, especially with the question of where you are going to live hanging over you. A Buy For University Mortgage provides an investment opportunity, while at the same time ensuring that you live in a property of your choosing, and get your fellow student to help cover some or all of the costs of the mortgage.

Buy for University products are relatively new, having been offered by a few lenders over the last 5 years, and we can assist you with making your property dreams a reality. We’ll take care of everything and make buying a property to live in while at University as easy as possible. We aim to advise and assist you and make the mortgage process as stress-free as possible.

We have access to Buy for Uni Mortgages available on an interest only or repayment basis for the purchase of property in mainland England and Wales. These will require a 20% deposit or a Collateral charge which is a legal charge against the parent property.

All products have no early repayment charges which is useful for those whose circumstances change and they may want to leave University. If an interest only mortgage – this will convert to capital repayment after completing the course.

Our approach - and how we do it

Enquire

We love speaking with our clients. Either give us a call or fill in one of our contact forms. Remember, we love a challenge!

Discuss

One of our Advisors will then find out what you’re looking to do, discuss your options and answer any questions you may have.

Relax

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.

What are the main conditions of a Buy For University Mortgage?

Buy for Uni Mortgages can be surprisingly straightforward as long as some of the following conditions are met:

Purchaser must be 18+ year old UK resident students in Higher Education throughout England and Wales
Student needs a minimum of 12 month remaining on their course at the start of the mortgage
Property must be within 10 miles of the University attended
The student must reside in the property
Property should have no more than 3 bedrooms
Two rental projections required to confirm expected rental income from each room being rented out
Property can be purchased one year in advance (University acceptance letters required)
Maximum age 70 at the of the completion of the mortgage term for the guarantor
Ex local authority flats, studio flats that don’t have a separate bedroom and bathroom and flats in London won’t be eligible.

How much could you borrow on a Buy For Uni Mortgage?

Lenders may lend you between £90,000 to £400,000 up to 100% of the value of the property. The amount you are able to borrow will be based on several factors including the rental income that will be received from letting rooms in the property.

Where there is insufficient rental income to support the mortgage, the income of the family member(s) supporting you, after the deduction of financial commitments, will be taken into consideration. Acceptable family members include parent(s), step-parent and grand-parent(s).

If the application meets the criteria, a mortgage will be provided on the property to be purchased. On loans greater than 80% of the value of the property, additional security will be needed:

1. Security through savings: allows the family member(s) to use their savings to help the buyer without having to ‘give’ the money to them.

Example: Property valued at £150,000 Buy for Uni mortgage for £150,000 (100%) of property value 20% of property value (£30,000) deposited as security in a Savings account

2. Security through property: the family member agrees to using equity in their own residential property being used as security.

Example: Property valued at £150,000 Buy for Uni mortgage for £150,000 (100%) of property value 20% of property value (£30,000) secured against equity in the family members residential property

3. Or, a combination of options 1 and 2 is available. The minimum amount of each security option is £5,000.

Example: Property valued at £150,000 Buy for Uni mortgage for £150,000 (100%) of property value 20% of property value (£30,000) covered by £15,000 secured against equity in the family members residential property and £15,000 deposited in a Savings account.

What happens when you finish your Uni course?

The Buy for Uni mortgage is designed specifically to enable you as the borrower to take ownership of a property while you are studying. When you complete your course, you have several options.

You may wish to keep the property as your residence, either with or without tenants, or convert the mortgage to a Buy-to-Let. You will need to inform the lender of your intentions so that options can be provided based on your personal circumstances.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

This article is for information only and should not be seen as advice or a recommendation to take action.

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