Self-employed mortgage advice in Liverpool
If you work for yourself, you've probably heard that mortgages are harder. They're different, not impossible. Lenders look at your income in a different way, they don't all look at it the same way as each other, and the wrong one can say no to a case another would be happy with. Self-employed clients are a large part of what I do, and one of the first things I do is look at how a lender is likely to read your figures before anyone applies anywhere.
How lenders look at your income
Sole traders and partners
Lenders generally work from your tax calculations, the SA302 forms, and the matching tax year overviews from HMRC, usually for the last two or three years. Some will consider one year with a strong story behind it.
Limited company directors
Most lenders look at your salary plus dividends. Some will look at your share of the company's profit instead, which can make a real difference if you leave money in the business. Which lenders do what changes over time, and keeping track of that is part of my job.
Contractors
Some lenders will work from your day rate rather than your accounts, depending on how you're set up and how long you've been contracting.
Whichever you are, lenders also want to see that the income is likely to continue, so a falling year or a gap gets questions. Better to answer them with me first.
Honest about affordability from the first call
I'll give you an honest view of what's realistic on the first call, based on your real figures. Sometimes the honest answer is “not yet”. If it is, I'll explain what would change it and when to come back. I'd rather you heard that from me now than from a lender after you've found a house.
What I'll need from you
Your last two or three years of SA302s and tax year overviews from HMRC. If you're a company director, your last two or three years of company accounts as well. Three months of bank statements for every account, personal and business. Proof of deposit, photo ID and proof of address. It sounds like a lot. Most of it is in your HMRC account and your accountant's inbox, and I'll let you know what's needed and when.
What happens next
The same as for any client. A conversation of 30 to 45 minutes, a budget built together, a decision in principle on verified income before you view, and a second meeting once your offer is accepted to go through the recommendation and the protection to sit underneath it. Then my administrator works alongside me to completion, aiming for a written update every Friday.
“He made a process that can feel complicated really straightforward.”
Questions self-employed clients ask me
How many years of accounts do I need?
Most lenders want two or three years of figures. A few will consider one, depending on your trade and your history before you went self-employed. Tell me your situation and I can usually give you an idea of where you stand.
Do lenders use my salary and dividends or the company's profit?
It depends on the lender. Most use salary plus dividends. Some use your share of net profit, or profit plus salary, which can suit directors who keep money in the business. That's exactly the kind of difference I check before recommending anyone.
I've only been trading for a year. Can I get a mortgage?
Possibly. It depends on the lender, your trade, and what you were doing before. It's a conversation, not a no.
My latest year was lower than the one before. Does that matter?
It can. Many lenders use the latest year or an average of the last two, and a drop prompts questions about why. If there's a good reason, we explain it up front rather than let an underwriter guess.
Do I need an accountant's certificate?
Not always. Some lenders ask for one; most work from SA302s, tax year overviews and accounts. If one is needed I'll flag it early so your accountant has time.