Remortgage When Self-Employed
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Remortgage When Self-Employed
Richard Grigg explains how the remortgaging process works if you are self-employed.
Is it harder to remortgage if you are self-employed?
No. The self-employed are people too, and it will be exactly the same as if you were regularly employed on PAYE. There are some exceptions – and if you’re brand new to self-employment that’s always a bit more difficult.
This is something I’ll repeat as we go through, but If you’re looking to remortgage, you’re in a stronger place than if you’re looking to purchase. Your existing lender has proof that you consistently pay your mortgage and will always make sure you’re not paying more than you need to.
That being said, if we’re looking to remortgage you elsewhere for better rates, self-employed people will be treated in exactly the same way as for a purchase. So we’ll be looking for consistency in income, which can be more difficult if you’ve recently gone self-employed.
But in certain niches, self-employed people can do far better than their employed counterparts. It’s give and take across the market.
How long do you have to be self-employed to remortgage? Can you remortgage if you’re newly self-employed?
Consistency is what a lender is looking for. If we’ve got a couple of years’ tax returns or limited company accounts that show consistent income, that’s always the easiest.
We have lenders that will look at you after a 12-month period, once you have one set of accounts. Most of the market is looking for a two-year track record in self-employed accounts or limited company net profit.
That being said, in the last couple of months we managed to get a deal agreed for a client who was newly self-employed. They hadn’t been trading for more than six months at the point of application. There are options out there, but it’s two years in the majority of cases.
How does the self-employed remortgage process work?
The process would be exactly the same, but there are big benefits that self-employed applicants can get. A typical employed person has a stable salary that pays the same every month, and at any point in the year their pay looks exactly the same.
Outside of limited companies, the self-employed have the April tax year deadline as their end-of-year. With time and planning, you can potentially get a better result by starting the remortgage process really nice and early. Typically, we would look to start a remortgage six months before the end of your existing deal.
If we’re about to hit the end of the tax year, we’ve got time for a new set of accounts to be produced. That will help if the next set of figures are better than the last year – it will open up more options for us to get the best deal for you.
Or, if we start that process in November or December, and we’re doing it six months in advance, we’ve got an opportunity to push that remortgage process back a little bit and catch up the new tax year once we’ve got that end of year return.
Limited companies can have a completely different year end. Some lenders will look to use the limited company net profit rather than the client’s tax return. So at that point, you’ve potentially got two different sets of accounts that can help you get the best deal.
So while the process isn’t any different and we would start the process with any client six months in advance, that window is more crucial to the self-employed. It’s all down to how variable their income is and when the next set of accounts will be produced.
Can you remortgage with no proof of income?
If you were looking to move to a new lender, away from your existing one, they will want to see that you can afford those repayments.
The Financial Conduct Authority requires lenders to make sure they’re not putting you in a dangerous position by lending you more money than you can afford. So outside of your existing lender, we always need proof of income.
But your existing lender will always work with you to make sure that you’re not paying more than you need to. There was a big industry change recently called Consumer Duty, which puts pressure on lenders and brokers to make sure that clients are being properly looked after.
That works very well for clients who are struggling. Perhaps they are very recently self-employed and have no proof of that first year’s income. That is a point to reach out to your lender – or a broker – to look at the options available.
Ultimately you can make sure you’re not paying more than you need to. You can simply stay where you are and renegotiate your deal with your existing lender.
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.
Can I remortgage if I have bad credit? Does it make a difference if I’m self-employed?
No, it doesn’t make a difference if you’re self-employed. You can have a mortgage if you have bad credit – although it will vary. Bad credit is a big spectrum.
To some people, that’s a missed mobile phone payment. At the other end of the scale, it could be bankruptcy just six weeks ago. Ultimately, it’s about trying to find the right lender for those circumstances. At any point on that spectrum, there is a lender to assist in some way.
It may be better to stay put. As I just alluded to, your existing lender will always try to work with you rather than see you move somewhere else. Nevertheless, specialist lenders may offer a better deal if you move across the market.
Again, it’s an area where a broker really helps. We understand that market and make sure we find the best deal available for our client at the right time. It could be helping you stay put, or moving to a new lender for lower interest rates, better packaging, more borrowing or because you’re looking to make some changes.
You might be looking to do some home improvements, or debt consolidation to take away some of the pressure with that remortgage. If you’ve got particularly poor credit because of the volume of debt, sometimes things can be made easier by consolidating.
It’s not for every client. There are always risks when taking unsecured debt and securing that against the house. But it’s about options. The more options you’ve got, the better decisions you can make.
Can a self-employed person be declined a remortgage?
Yes, the same as anyone can have a remortgage declined. Ultimately, it comes down to your credit profile, your income and what you’re looking to borrow.
Again, I would reassure people that reaching out and speaking to your existing lender is always the next point of call. They will work with you wherever possible to ensure you’re not paying more than you need to.
How can I better my chances of a good remortgage as someone who is self-employed?
The biggest thing if you’re self-employed and your mortgage is coming up for review, is to get onto it as early as possible – whether that’s directly or through a broker.
There are vast differences in the way that self-employed income can be assessed across the market. With more time, we can explore different dates with regards to the end of your company year or tax year. We’ll get ahead of that and provide the relevant documentation.
The earlier you can start that process, ultimately, the better the cost savings should be because there are more options available.
What are the benefits of remortgaging?
It varies dramatically from client to client. You might be looking to do home improvements. You want to borrow a little bit more – but your existing lender either is expensive or won’t lend the amount that you need.
You’ve then got the opportunity to speak to many other lenders in the market to get that extra borrowing. It could be a very competitive market, and your existing lender may not be able to offer the same interest rate as others at that particular point in time.
It’s important to work out exactly what that cost looks like, because moving across the market can come with legal fees – where a solicitor moves that money from one lender to another.
At the moment, in April 2025, there’s a big drive for green deals with cash back or interest-free borrowing if you move to the right lender. That support is designed to assist with paying for solar panels, air source heat pumps, batteries, insulation and other solutions to keep the running costs of the house down and promote a greener way of living.
That’s a really competitive sector at the moment and the difference in the deals out there is wild. If your existing lender doesn’t have a green deal incentive, others out there may offer far above the normal remortgage opportunities. These differences across the market could make it worth moving.
What else do we need to know about remortgaging for the self-employed?
As far as the self-employed are concerned, it’s all about the variety in what is available out there and how different lenders assess your income. It’s not as simple as just presenting your payslip to show what you earn.
The benefit of a broker is the access to all those deals and our understanding of all of those lenders and how they assess income.
The difference in what one lender could lend versus another could be hundreds of thousands of pounds. Plus, as we speak now in April 2025, the competition is heating up out there. There are big benefits in what’s available.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.