I’m self-employed – will I ever be able to own property?
It’s a common misconception that lenders won’t give mortgages to people who are self-employed. In fact, that’s not strictly true. Many lenders will consider lending to self-employed borrowers – you could be closer to owning property than you think.
I’m not a mortgage broker so everything in this blog is based on my own experience. For accurate, detailed advice specific to your situation, please consult a professional mortgage broker (look for the Cert CII (MP) qualification).
Before you start
As with any mortgage application, the preparation needs to start some years ahead of actually borrowing the money. If you’re self-employed and applying for a mortgage, you’ll need proof of your income. As this won’t come in the form of payslips, lenders will usually want to see two tax years’ worth of accounts. Be sure that your financial records are spot on, and also show best practice. Lenders will want to know that you’re being responsible about the way you manage your company’s money – make sure that your books reflect this. Evidence of maxed-out credit cards and pay day loans could make you look bad; moderate credit card use and regular payments by direct debit make you look like someone who manages their money well.
You will also need to save at least 5% of the property price to put down as the deposit. Again, this will require forward planning. Look at an online mortgage calculator and work out roughly how much your potential property could cost – this will help you work out how much you need to save.
Find a mortgage broker
Because you probably don’t work nine-to-five and your income might not be the same each month, a regular high street bank might not have the right mortgage for you. Fortunately, independent mortgage brokers can help. Most independent brokers have access to a wide range of mortgages and can help you find the one that best fits your circumstances. Their advice is usually free to the borrower, and a broker will help you assemble the right set of documents as well as explaining the mortgage process and translating the jargon!
Get a Mortgage in Principle
Once you’ve found a mortgage that meets your needs, it’s a good idea to get a mortgage in principle, also known as an agreement in principle. This is not the same as a mortgage, but it states that if your circumstances remain the same, you could borrow a particular amount of money to buy a house. Having a MIP shows estate agents and sellers that you’re a serious buyer as well as speeding up the buying process – two points in your favour when you put in an offer.
Buy property in East London
Self-employed people can get on the property ladder – you’ll just need to provide the right evidence to mortgage lenders. If you’re ready to buy property in East London get in touch with me, Adam Dockley, today on 020 3633 4440 – I’m sure I can help you find the perfect home.
I am not a mortgage professional and this blog is only intended as a loose guide to preparing to take out a mortgage if you’re self-employed. Please consult a professional mortgage broker before you take any serious steps.