Self-employed? 6 things mortgage lenders might want to see

Self-employed? 6 things mortgage lenders might want to see

At first glance, getting a mortgage when you’re self-employed might seem more complex – but it’s not impossible.

As Jo Jingree, Mortgage Confidence’s, mortgage adviser explains: “Whether you are sole trader, company director, freelancer or contractor, yes there might be a few extra hoops for you to jump through when you’re self-employed.

“But that’s only because lenders want to be sure you have a steady, reliable income so can therefore afford to pay back your mortgage. During the height of the pandemic, mortgages for the self-employed took a bad hit. But thankfully, lender’s criteria has eased up slightly.

“And with a good mortgage adviser by your side who has expert knowledge of lending criteria, it needn’t be as difficult as you think.”

So, if you’re seriously considering 2022 as the year you’ll become a property owner or move home, here are some documents to have at your disposal:

 

1. Your company accounts

 

Are you a director of a limited company? If so, to assess your lending criteria many lenders will want to see the last three years of your finalised company accounts to give a general overview of your financial history.

Jo explains: “This document will show your profit, any losses and will detail the value of everything the company owns, owes and is owed.”

If you’re looking for these – speak to your accountant or log in to your HMRC portal.

 

2. Your Tax Calculation form 

 

Do you self-assess your own tax, or get an accountant to do this for you?

Sometimes your Tax Calculation form might be referred to as your SA302, but it’s the same thing.

Jo says: “This form is used by HMRC to evidence your earnings every tax year. Lenders will usually want to see the last two or three years SA302s. Many lenders will use this to indicate what you can borrow and what you can afford in mortgage repayments each month.”

If you use an accountant, you can ask them for your SA302. Or you should be able to log onto your HMRC account and find it there.

 

3. Tax Year Overviews

The last three years of your Tax Year Overview may be required so lenders can double check the information provided on your SA302 is correct.

“Usually, your Tax Year Overview is produced by HMRC after you have submitted your self-assessment tax return,” Jo tells us. “This file shows the amount of tax due to be paid.”

Again, this can be found on your HMRC account or get in touch with your accountant if you have one.

 

4. Business bank statements

Another thing to have to hand is the last three months of your business bank statements.

Jo says: “Lenders will usually want to check your monthly income and your regular monthly outgoings. Again – this is all to do with affordability.”

 

5. Personal bank statements

Jo says: “Just like your business bank statements, lenders will want to scan through recent personal bank statements.

“They want a snapshot your monthly financial commitments to see how this will impact your ability to repay a monthly mortgage repayment.”

 

6. Contact details for your accountant

In some circumstances it can be really beneficial to ask your accountant and mortgage adviser to liaise, to ensure your mortgage application runs as smoothly as possible.

 

Getting your financial history in order

Even if your lender doesn’t require all these documents or pieces of information, it certainly puts you on the front foot.

Are you now in the position to enquire about getting a mortgage? Whether you are buying your first home, looking to move or remortgage do get in touch.

 

Please be aware that by clicking on to some of the above links you are leaving Mortgage Confidence Ltd website. Please note that Mortgage Confidence Ltd nor HL Partnership Limited are responsible for the accuracy of the information contained within the linked site(s) accessible from this page.