If you're self-employed and looking to buy a home, you're not alone. Many people in Retford and beyond run their own businesses and face unique challenges when applying for a mortgage. At Swift Financial, your local mortgage broker, we understand these challenges and are here to guide you through the process. In this blog, we answer some of the most frequently asked questions about self-employed mortgages, so you can make informed decisions.
1. Can you get a mortgage if you're self-employed in Retford?
Yes, absolutely! Being self-employed doesn't mean you can't get a mortgage. Lenders do consider self-employed individuals, but they assess applications differently. Unlike salaried employees, self-employed applicants need to demonstrate their income in a different way, usually through business accounts and tax returns. At Swift Financial, we work with a wide range of lenders to find the best mortgage options for your unique situation.
2. How long do you need to be self-employed to get a mortgage?
Lenders can accept self-employed individuals with just one year of trading history. While many lenders prefer applicants with two years of self-employment, there are options for those who have been in business for a shorter period. If you’ve been trading for only one year, lenders may still be willing to approve your mortgage, depending on factors like your business's profitability and your overall financial situation. At Swift Financial, we can help you find lenders that are more flexible with shorter trading histories.
3. How do you qualify for a mortgage if you're self-employed?
You will go through the same application process as those who are employed and are subject to the same credit checks and affordability assessment. Lenders will assess your income, credit score, debts, and the size of your deposit. As a self-employed individual, you’ll need to provide proof of income, such as business accounts and tax returns, and lenders will assess whether you can afford the mortgage based on your financial situation. At Swift Financial, we will guide you through the process, ensuring you present your financial documents correctly to maximise your chances of approval.
4. What documents will the lender ask for if I'm self-employed?
Lenders will generally ask for the following documents:
Self-Assessment tax returns (SA302): These show the income you’ve reported to HMRC.
Business accounts: Usually for the last 2-3 years.
Bank statements: To verify cash flow and ensure your business is financially stable.
Proof of identity and address: As with any mortgage application, you’ll need to provide documents like your passport or driving license.
At Swift Financial, we’ll help you gather and organise these documents to ensure your application is as strong as possible.
5. How much will I be able to borrow?
The amount you can borrow will depend on a variety of factors including your income, credit score, debts, and the size of your deposit. For self-employed individuals, lenders typically offer between 4.5 to 6 times your annual earnings. However, self-employed borrowers may face more scrutiny, with lenders carefully considering your business's financial health. Swift Financial can help you assess your borrowing capacity and find the best mortgage deals that suit your financial profile.
6. Can I get a mortgage if the business profits have decreased or fluctuated?
Yes, you can still get a mortgage even if your business profits have fluctuated. We have access to lenders who specialise in working with self-employed individuals and understand that businesses can experience ups and downs. These lenders will assess your overall financial situation and may be more flexible when considering your application. At Swift Financial, we can help you present your case to lenders who are more understanding of the realities of running a business.
7. Can I get a mortgage with one year’s accounts?
Yes, absolutely! Even if you’ve only been trading for one year, there are still lenders who will consider your mortgage application. Many lenders will take a more flexible approach and look at the broader picture of your business's financial health. At Swift Financial, we can connect you with lenders who are happy to consider one year’s accounts and can help guide you through the application process.
8. Can I get a mortgage without an SA302?
It’s possible to get a mortgage without an SA302 form, though it depends on the lender. Some lenders may accept alternative documentation, such as your business accounts or a letter from your accountant confirming your income. However, most lenders will request an SA302 as it’s the standard form used by HMRC to verify income. At Swift Financial, we can help explore options for lenders that may be more accommodating if you don’t have an SA302.
9. Will the lender use turnover or profit to calculate how much I can borrow?
Lenders will never use turnover to calculate how much you can borrow. Instead, they will always focus on your profit. Profit gives a clearer picture of your financial health and your ability to repay the mortgage, as it reflects your earnings after business expenses, taxes, and other costs are deducted. At Swift Financial, we’ll ensure your profits are presented correctly, helping you secure the best possible mortgage offer.
10. Will the lender use profit before or after corporation tax?
While many lenders focus on profit after corporation tax, there are some who may use profit before tax. The approach varies depending on the lender and your business structure, so it’s important to know your options. At Swift Financial, we will help you navigate the specifics of your business’s tax situation and connect you with lenders who offer the most favourable terms.
Conclusion
Navigating the world of self-employed mortgages can be complex, but with the right guidance, it’s possible to secure a mortgage that suits your needs. At Swift Financial, we have extensive experience helping self-employed individuals in Retford and surrounding areas access the best mortgage deals. If you have any more questions or need help with your mortgage application, contact us today. We're here to support you every step of the way.
Contact Swift Financial -Your local mortgage brokers in Retford, helping you secure the right mortgage for your self-employed needs.
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