5 Self Employed Mortgage Myths

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We help self employed people boost their mortgage chances day in day out. We often hear things our client’s have heard from a friend, or on the grapevine which aren’t true. Here is a list of 5 self employed mortgage myths you should know about before getting your mortgage approved.

1. You need 3 years accounts to get a mortgage.

Although it is true that the more accounts you have, the better your chances are of getting approved, this is simply not always the case. There are many lenders who will now work off 2 years accounts, and in some cases, income from just one full years’ trading can be used for the purposes of calculating your maximum borrowing capacity (but only where everything else presents well).

2. If you own your own limited company, and employ yourself, you can get a mortgage based on your most recent 3 pay slips.

This one’s definitely not true I’m afraid. It would be pretty easy for a limited company director to increase their income over a short period for the purposes of getting a bigger mortgage. This is not something which is allowed as income derived in this way is unlikely to be sustainable. Instead, lenders will almost always want to see that your income from the business is sustainable over a number of years.

3. Because you’re self employed, you’ll need a bigger deposit and a perfect credit score.

Most lenders will accept income from self employed people. Though some are more understanding than others. What this means is that it’s highly likely a self employed person or director will have access to a very similar range of products as the average Joe, so if you’ve only got a deposit of 10% or even 5%, or you’ve had a few credit issues in the past, provided your income presents well over a sustained period.

4. There’s no way you’ll get a mortgage without a Chartered Accountant.

We’re massive advocates of using accountants to submit your tax returns. That being said, if you’re self employed and have been able to produce your financial records accounts compliantly and pay your tax on time, there’s no reason you shouldn’t be able to get a mortgage. From time to time, we do see cases where an accountant is required to wade in to answer questions the lender might have about sustainability.

5. I need to own 100% of my company to get a mortgage

You can get a mortgage based on ownership of the business from just 20%. If you don’t own this much of the business, you might still be able to get a mortgage, but instead of reviewing the company accounts, you might be treated as a regular employee.

Get in touch with us if you think there are any self employed mortgage myths that we’ve missed, and we’ll add them to the list.

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