Self Employed Mortgage First Time Buyer
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Self Employed Mortgage First Time Buyer
Ishwar is here to tell us all about how the mortgage process works if you are a self-employed First Time Buyer, by answering some frequently searched questions.
Can I get a mortgage as someone who is self-employed and a First Time Buyer?
Yes, you can of course. We can facilitate both: self-employed and First Time Buyers individually or as a combination. Whether you’re set up as a sole trader, a limited liability partnership or a limited company, we have access to lenders who can take income into consideration in many different ways.
Your income might be assessed as salary and dividends or a lender could consider the profits within your business. That approach can often allow for greater borrowing.
Is it difficult to get a mortgage when you are self-employed and a First Time Buyer?
It’s not too difficult as long as the income can be evidenced. Most lenders will take an average of the past two to three years’ accounts towards affordability. We also have some lenders on our panel that will consider just one year’s accounts.
How can I get a mortgage with just one year’s accounts?
Most lenders normally require two to years’ worth of self-employed records. But some lenders on our panel will definitely look at you even if you only have one year’s accounts to hand.
How much can I borrow for a mortgage as a self-employed First Time Buyer?
That’s a hard question to pinpoint, because it all depends on your income and what sort of figures are on your accounts. The maximum amount you are able to raise is informed by your provable self-employed income. The maximum loan to value will be 95% on the property, in most cases.
How do lenders calculate my earnings?
In most cases, lenders would look at your profit from self-employment over the past two or three years. However, the latest year can be considered if there is a plausible reason for that, and your earnings can be deemed sustainable moving forward.
For a limited company director, you can use either salary and dividends, or salary and net profits towards affordability.
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What documents do I need to apply for a self-employed First Time Buyer mortgage? How do I prove my income?
Lenders have different approaches to this. Some might ask for your latest two or three years’ accounts – your personal accounts – and for limited company directors, your latest two or three years worth of business accounts, as well.
What if I have bad credit as someone who is self-employed and looking for my first mortgage?
A self-employed individual with mid to severe adverse credit can still be considered. You would be treated no differently from a standard PAYE employee.
That said, some lenders have set criteria about adverse issues and may not consider defaults, CCJs and debt management plans, for example. Others may be able to consider those subject to a satisfactory credit score. We do even have a lender on the panel that doesn’t actually credit score at all.
How can I improve my chances of getting a mortgage as someone who is self-employed and a First Time Buyer?
The more deposit you put down, the higher the chance that you will get accepted on the mortgage. With a higher deposit, you’re also likely to go into a lower loan to value bracket, which opens up better interest rates for yourself.
If you are struggling to get accepted by a mainstream bank for some reason, you may need to apply to a specialist lender that deals with self-employed borrowers and their rates may be slightly higher. But this is a way to get things over the line for you and into your new home.
How do I apply for a mortgage as a self-employed First Time Buyer?
Using a mortgage broker can help you navigate a complex and ever-changing world of mortgages. We will help you find the most suitable and affordable product for your personal situation.
We will also answer any questions you may have and support you along the way. We’re here to make the whole process easier for yourself.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
There may be a fee for mortgage advice. The precise amount of the fee will depend upon your circumstances but will range from £99 to £549, and this will be discussed and agreed with you at the earliest opportunity.