Fear not, as there are some mortgage lenders willing to help. Being self-employed can be as good as it gets. No nine-to-five treadmill, no one barking orders at you, no stressful commuting every day. It's you who calls the shots.
Despite all the benefits that working for yourself entails, it can be a hard slog. You may have irregular work patterns, work is not guaranteed and working hours are often outside the conventional 9 to 5. It's hard to prove your income - which is often irregular - and as such you'll have a hard time securing a mortgage. A YouGov / Countrywide survey in November 2012 found that almost 1 in 10 (9%) people who had an unsuccessful mortgage application indicated that being self employed was the main reason they were turned down.
The Office for National Statistics suggest that over 4 million people in the UK, or 10% of the working population, are self-employed. This figure balloons significantly when you factor in other people with unconventional income streams such as contract workers and others who earn through investments such as buy-to-let landlords and individuals who dabble in the stock market. The numbers rise again when you include people with more than one job, typically people who beaver away in the evenings as taxi drivers, cleaners, bouncers or working as bar staff.
In recent years there has certainly been a shift towards a self-employment economy but this has coincided with a changing mortgage regulatory landscape which has disadvantaged people who are unable to prove their income through conventional ways such as PAYE wage slips. The self certification schemes which used to provide a solution were particularly denigrated following the credit crunch and are no longer an option. The majority of high street lenders are often unwilling to consider the more complex financial affairs of a person who runs their own business.
Fortunately, intermediaries such as ourselves have access to lenders who are more proactive, taking a far more intelligent approach to credit scoring, with decisions made by experienced underwriters rather than automated computerised systems. These specialist lenders will individually assess your application, taking into consideration the number of years you have been self employed and your current circumstances. If you've started your business recently and only have one year’s accounts, there are a small number of lenders you make look upon your application favourably. Most lenders require at least two or three year’s accounts or self-assessment tax returns and will generally take an average when calculating income, but some specialist lenders will consider applications from entrepreneurs who has been building successful businesses and will base the amount they are prepared to lend on the latest accounts – which are often the highest.
Whether you're a first time buyer, or looking to move to your next property, an independent advisor will locate the best deals for you. Our expert advisers are well positioned to negotiate the best terms for you. Simply complete our no obligation enquiry form and a mortgage advisor will get back to you.