Top tips for getting a mortgage when self-employed

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Top tips for getting a mortgage when self-employed

According to HomeLet’s Rental Index, the average rent in the UK is £941 per calendar month. Many people see this as ‘dead money’ – going straight into the landlord’s pocket, with little benefit for them.

If you’re one of the thousands of people who decide to purchase their own home each month, as an independent contractor you may be concerned that you won’t be able to get a mortgage.

We’re here to tell you that’s not the case. Here is a summary of our top tips to help you secure a mortgage for your dream property.

Houses in a street.

Can the self-employed get a mortgage?

As contractor accountants, we’re often asked this question. This is because there is a myth in the contracting world, that because you’re self-employed, banks, building societies and mortgage lenders won’t lend to you.

In the past lenders were nervous about giving self-employed people mortgages because they deemed their line of work to be risky. However, as the number of people choosing to become contractors or freelancers has grown, lenders have realised they are missing out on this profitable sector and have changed their view on lending to the self-employed.

“Get yourself in a good position”

This is what we tell contractors when they tell us they are looking to purchase a home. Having your finances in order and all your paperwork up to date will make it easier for you to be approved for a mortgage.

Relaxing in your own home at the end of a long day no longer has to be a dream with our top tips for getting a mortgage:

  • Find a mortgage broker or IFA (independent financial advisor) who has experience in arranging mortgages for the self-employed. Not only will they know which lenders to look at, but it’ll save you time hunting for them yourself
  • Be honest with your mortgage broker about any debt, outstanding loans or CCJ’s you may have as they’ll need to know about these before searching for mortgage lenders
  • Have a good credit record – things like missed credit card repayments, missed bills and CCJ’s all count against you. Surprisingly, if you never taken credit e.g. never had a loan or a credit card, this can also hurt your credit rating
  • Keep clear and accurate records – the lender will ask for proof of your income. Depending on how you work they may ask for copies of your work contracts or 2-3 years copies of filed accounts. Do engage with a certified and experienced contractor accountant and have a copy of these documents to hand so as not to hold up the mortgage application
  • Curb your personal expenses – as part of the mortgage application the lender will review your outgoings to determine what you can realistically afford to borrow. If you know that in 6-12 months’, you’ll be looking to get a mortgage, review your expenses to see if you can cut back on unnecessary expenses

Man signing mortgage document

If you’re a contractor who is looking to purchase a property and you would like some professional advice, we can put you in contact with qualified and regulated mortgage advisors.

Speak to one of our Directors on 01962 867550 or send us a message via our website and we’ll put you in touch with them.

Alternatively, if you’re looking for a new contractor accountant, check out all-inclusive monthly accounting packages.

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