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Saturday 21 December 2024
Saturday 21 December 2024
Saturday 21 December 2024
Saturday 21 December 2024
Moving home as a self-employed individual presents unique challenges, but it’s far from impossible. At Barrett Mortgages, we’re here to help you navigate the process and find the right solution for your needs. Many lenders understand the complexities of self-employment and have developed processes to assess how much they’re willing to lend, making moving home achievable for self-employed borrowers.
Whether you’re a sole trader, a partner, or a company director, pathways to securing a mortgage are well-defined. For sole traders and partners, lenders typically focus on net profits. For company directors, salary and dividends are key considerations. Some lenders even recognise that business owners may not draw their full entitled income and will include an applicant’s share of net profits and salary in their calculations.
Common Misconceptions About Self-Employed Mortgages
A common misconception is that self-employed individuals face insurmountable barriers when moving home. This is simply not true. Another misunderstanding is around income requirements. While many believe you must have at least two years of accounts or tax returns to qualify, some lenders are happy to consider applications with just one year of accounts or a completed tax return.
Lenders often look for income stability or alignment with previous roles and industries. Some average the last two years of income if there’s an upward trend, while others may use the most recent year’s figures. This flexibility can be a game-changer, particularly for those whose recent earnings have increased significantly.
How Long Do You Need to Show Income?
The time period for income evidence depends on the lender. Most will review the past two or three tax years, averaging income or basing calculations on the most recent year. If you have a strong financial profile, some lenders may even consider applications with just one year’s accounts or a completed tax return.
Managing Mixed Income Sources
Self-employed individuals often juggle income from multiple sources. For example, a freelance musician might earn self-employed income from performances and PAYE income from teaching. These income streams appear differently on an SA302 form. With clear documentation, lenders can treat both sources equally, ensuring they’re factored into your overall affordability.
Key Documentation for Self-Employed Mortgage Applications
Lenders typically require specific documents to assess your income. These include:
Tax Calculations and Tax Year Overviews: For sole traders and partnerships, these confirm income and are easily downloadable from the HMRC portal.
Accountant’s Reference or Certificate: Limited company directors may provide company accounts. Many lenders also accept an accountant’s reference or certificate in a prescribed format.
This documentation helps lenders accommodate the unique circumstances of self-employed borrowers, ensuring fair assessments.
Overcoming Challenges in the Application Process
Some lenders may hesitate if there are significant changes in net profits or if directors rely on retained profits. However, lenders that cater to self-employed borrowers often consider retained profits as part of the application. At Barrett Mortgages, we match you with lenders who understand these nuances and provide tailored solutions.
How Barrett Mortgages Can Help
At Barrett Mortgages, we’re dedicated to helping self-employed home movers find the right mortgage solutions. Here’s how we support you:
Understanding Your Situation: We take the time to understand your financial setup, whether it includes mixed income sources or limited income history.
Expert Guidance: Our team helps you gather the necessary documentation, explains lender requirements, and identifies the best mortgage products for your needs.
Tailored Recommendations: With deep market knowledge, we recommend lenders who are flexible with self-employed applicants.
Support Every Step of the Way: From your first inquiry to securing your new home, we guide you through the process to ensure a smooth and stress-free experience.
One Key Piece of Advice for Self-Employed Movers
Preparation is everything. Ensure your accounts are up to date, your income is well-documented, and your financial goals are clear. Speak with a mortgage advisor early to set yourself up for success. Our team at Barrett Mortgages is here to answer your questions, simplify the process, and help you achieve your dream of moving to a new home.
Let us show you how owning a business doesn’t have to be a barrier to moving home. Contact us today to start your journey!
Moving home as a self-employed individual presents unique challenges, but it’s far from impossible. At Barrett Mortgages, we’re here to help you navigate the process and find the right solution for your needs. Many lenders understand the complexities of self-employment and have developed processes to assess how much they’re willing to lend, making moving home achievable for self-employed borrowers.
Whether you’re a sole trader, a partner, or a company director, pathways to securing a mortgage are well-defined. For sole traders and partners, lenders typically focus on net profits. For company directors, salary and dividends are key considerations. Some lenders even recognise that business owners may not draw their full entitled income and will include an applicant’s share of net profits and salary in their calculations.
Common Misconceptions About Self-Employed Mortgages
A common misconception is that self-employed individuals face insurmountable barriers when moving home. This is simply not true. Another misunderstanding is around income requirements. While many believe you must have at least two years of accounts or tax returns to qualify, some lenders are happy to consider applications with just one year of accounts or a completed tax return.
Lenders often look for income stability or alignment with previous roles and industries. Some average the last two years of income if there’s an upward trend, while others may use the most recent year’s figures. This flexibility can be a game-changer, particularly for those whose recent earnings have increased significantly.
How Long Do You Need to Show Income?
The time period for income evidence depends on the lender. Most will review the past two or three tax years, averaging income or basing calculations on the most recent year. If you have a strong financial profile, some lenders may even consider applications with just one year’s accounts or a completed tax return.
Managing Mixed Income Sources
Self-employed individuals often juggle income from multiple sources. For example, a freelance musician might earn self-employed income from performances and PAYE income from teaching. These income streams appear differently on an SA302 form. With clear documentation, lenders can treat both sources equally, ensuring they’re factored into your overall affordability.
Key Documentation for Self-Employed Mortgage Applications
Lenders typically require specific documents to assess your income. These include:
Tax Calculations and Tax Year Overviews: For sole traders and partnerships, these confirm income and are easily downloadable from the HMRC portal.
Accountant’s Reference or Certificate: Limited company directors may provide company accounts. Many lenders also accept an accountant’s reference or certificate in a prescribed format.
This documentation helps lenders accommodate the unique circumstances of self-employed borrowers, ensuring fair assessments.
Overcoming Challenges in the Application Process
Some lenders may hesitate if there are significant changes in net profits or if directors rely on retained profits. However, lenders that cater to self-employed borrowers often consider retained profits as part of the application. At Barrett Mortgages, we match you with lenders who understand these nuances and provide tailored solutions.
How Barrett Mortgages Can Help
At Barrett Mortgages, we’re dedicated to helping self-employed home movers find the right mortgage solutions. Here’s how we support you:
Understanding Your Situation: We take the time to understand your financial setup, whether it includes mixed income sources or limited income history.
Expert Guidance: Our team helps you gather the necessary documentation, explains lender requirements, and identifies the best mortgage products for your needs.
Tailored Recommendations: With deep market knowledge, we recommend lenders who are flexible with self-employed applicants.
Support Every Step of the Way: From your first inquiry to securing your new home, we guide you through the process to ensure a smooth and stress-free experience.
One Key Piece of Advice for Self-Employed Movers
Preparation is everything. Ensure your accounts are up to date, your income is well-documented, and your financial goals are clear. Speak with a mortgage advisor early to set yourself up for success. Our team at Barrett Mortgages is here to answer your questions, simplify the process, and help you achieve your dream of moving to a new home.
Let us show you how owning a business doesn’t have to be a barrier to moving home. Contact us today to start your journey!
