Self-Employed Mortgage First Time Buyer
Your new home or investment property is just a mortgage application away. And with our expertise and tenacity, that property dream is closer than you think.
Get in touch for a no-obligation chat about how we might be able to help you.
What's On This Page?
Get In Touch
Self-Employed Mortgage First Time Buyer
James Best talks to us about mortgages for self-employed First Time Buyers.
Can I get a mortgage as a self-employed First Time Buyer?
You absolutely could. It’s exactly the same as for someone that’s employed and a First Time Buyer, or is self-employed and buying again. The process is exactly the same.
There aren’t any specific exclusions just because it happens to be your first property and you’re self-employed. It’s equally accessible.
How does getting a mortgage as someone who is self-employed and a First Time Buyer work?
The process and the journey we go through as brokers with our clients is exactly the same. You won’t be treated any differently because you are a First Time Buyer who is self- employed
The main difference in terms of how it all works is just the different types of documentation that you will need to provide.
How many years do you have to be self-employed to get a mortgage as a First Time Buyer?
Most mortgage lenders are happy with two full years’ trading. That’s enough time to establish how the business is going, if there are any trends. Hopefully the turnover and profit of the business is increasing.
However, if you’ve only got one year’s worth of trading, you could be considered. That’s particularly the case if, for example, you have experience within a certain industry as an employee, and then you’ve moved across to being self-employed in the same discipline.
To find out if this will work for you, just pick up the phone and get in contact with us because we’d love to hear from you.
How much can I borrow for a mortgage if I’m self-employed and a First Time Buyer?
There are a couple of schemes that are bespoke and only applicable to employed clients. But the majority of the time, someone who’s self-employed would be able to borrow pretty much the same as someone who is employed.
You’re at no disadvantage if your income is the same as someone that is employed. It’s all treated the same.
How is a mortgage calculated for a self-employed First Time Buyer in the UK? How do lenders calculate my income?
It’s not treated any differently if you’re a First Time Buyer. There are a few different ways that you could be self employed, which drives how lenders work out your income.
For clients that are sole traders or in partnerships, typically lenders look at the net profit from the business. They will look at either an average of two years or the latest year if there’s an upward trend. It may vary, but that’s why it pays to talk to us about your circumstances, because we’ll be able to find a lender that fits.
For clients who own their own limited company, most lenders will take your director’s salary plus any dividends. Again, they will look at either taking an average or the latest year, depending on what those figures look like.
There are also day rate contractors, which is common within the IT industry. Sometimes we could go off their contract. There are other areas like the Construction Industry Scheme (CIS), where people are paid a bit differently and have remittance slips. We could use those like pay slips.
Some lenders, especially for directors of a company that use an accountant, will accept an accountant’s reference and certificate. So it’s very broad in how the lenders may interpret your income. That could give you extra choice in your mortgage options, as well.
Speak To an Expert
Come on in and be quite forward with what you’re after – just be very honest with your mortgage broker. It’s good to make sure that we know absolutely everything about you. That way we can’t be blindsided by a lender. An open book policy is very good when coming to see your mortgage broker.
What documents do I need to apply for a self-employed First Time Buyer mortgage?
If you do your accounts via HMRC, we’d need your most recent two years’ tax calculations, along with the corresponding overviews that show the income from your self-employed work.
If it’s a limited company, we could still use self-assessments – or you may have company accounts done by an accountant. Depending on the lender, we might use an accountant’s certificate.
For a day rate contractor, it’s the contract. And in all instances, regardless of your self-employed discipline, we would need three months’ business bank statements to show current turnover and the income and outgoings for the business.
What if I have bad credit as someone who is self-employed and looking at my first mortgage?
It’s exactly the same as if you are employed. Lenders look at this case by case. Some offer terms to clients in all different circumstances. The most important thing you should do is get a copy of your credit report, ideally one that shows all three of the reference agencies.
Review that with a qualified broker and we’ll see what the circumstances are. The most important thing is to be open about your circumstances and explain the situation. If we can’t help you out this time, we could put you on a path to get onto the property ladder in the near future.
How can I improve my chances of getting a mortgage as a self-employed First Time Buyer?
One challenge with First Time Buyers is that you don’t have a track history with a mortgage. Have a look at your credit report and make sure everything on there is accurate.
If there are any anomalies, speak to the organisations involved to get it corrected. Simple things like getting on the electoral roll where you live and getting your addresses up to date could help get you through the lenders’ credit scoring process.
Make sure your last three months’ worth of bank statements look good, that you’ve got money coming in, you’re paying all your bills on time and there aren’t any unpaid direct debits. Don’t get heavily into your overdraft.
If you do have a few years’ worth of business behind you and the books look good, profits are level or going up, that will help up maximise your income.
For self-employed limited company directors, we could look at both company accounts and personal tax returns. Sometimes the information differs across those – so it’s important to give your advisor the whole picture to work out the right way forward for you.
How do I apply for a mortgage as a self-employed First Time Buyer? How can a mortgage broker help here?
Get in touch with a qualified broker. We’re able to look at lots of different options. A broker with a lot of experience in helping lots of self employed clients will make you feel at ease.
We tell you everything you need to know, and guide you throughout that whole process. Go by recommendations – have a look at reviews online, as you would for most things. Speak to friends and family about local brokers and see how they could help.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.