Mortgage Advice in Bristol for Self Employed Applicants
Self-Employment is always on the rise, which brings a surge in self employed mortgages in Bristol. There are now more opportunities than ever to work from work, start a business, and more. As an expert Mortgage Broker in Bristol, we rarely see people planning to stay with their first employer from their first year through to retirement. They want to change their jobs to improve their personal development and financial situation.
There are lots of opportunities for the self employed and freelancers within the many sectors available. We can thank the world for becoming more interconnected. We are constantly learning, which opens more and more opportunities for the self employed within these industries.
It used to be difficult for Self-Employed applicants to obtain a mortgage. Additionally, with Self Employment now becoming a lot more common and a lot more opportunity opening up in the market, lenders have become more relaxed and lenient with self-employed applicants. The process of applying for a mortgage as a Self Employed applicant is now a lot easier than in previous years.
Self Employed Mortgage Hints and Tips in Bristol
To get you prepared for your mortgage, we have compiled a small collection of helpful mortgage guides to support anyone from Self-Employed mortgage applicants to those considering Moving Home in Bristol. In any case, if you are a First Time Buyer in Bristol, we are sure that you will find the assistance of a dedicated mortgage Advisor in Bristol beneficial.
How many years’ books do I need?
The minimum you will need to obtain a mortgage is one year’s accounts. If you go with a specialist self-employed lender, you will find that they often work off a single year, whereas high street lenders tend to be a little stricter and will want two year’s accounts from you.
Unfortunately, statistics show that most new attempts at running a business end up being unsuccessful, and this is why lenders always need you to evidence your track record to prove you are reliable and stay open for business.
How will a lender assess my income?
Most lenders will look at the average of your last two years’ worth of income. Although your business has grown over the past year, and the lenders can see that you will be able to afford a mortgage and run your company, they will go off the latest year and ignore anything that has happened previously.
I’m a director of my own limited company
If you are a director of your own limited company, you are technically an employee of your own business. However, lenders will not view it this way and will only assess you as an employee if you own less than 25% of company shares. Lenders often add the dividend you have drawn to your annual salary as a way to work out your earnings for the year. The amount you can borrow for your mortgage will get based on many of these particular figure.
You will find that some lenders will work from your net profit from time to time rather than your salary/dividend. It works in favour of company directors who like keeping their drawings low.
My accounts don’t reflect the true success of my business – what are my options?
As a committed Mortgage Broker in Bristol, this is a question that we find ourselves getting asked frequently. During the meeting you have with your accountant each year, you will discuss how to minimise your tax liability. It works the other way when it comes to taking out a mortgage as a Self-Employed Mortgage applicant, where the more income you have declared, the bigger the mortgage you may find yourself able to obtain.
How much deposit do I need to put down?
Whether it’s a Self-Employed Mortgage or not, a minimum of a 5% deposit is still required. It’s the same as employees. If you only have one year’s accounts, you might find it more beneficial to put down a bit more deposit than what you initially would’ve to increase your chances of succeeding. See our article to find out more on how much you need for a deposit in Bristol?
Contractor Mortgages
When it comes to looking at mortgage options for contractors, there are lots available. Nowadays, it’s a more common occurrence to find people working from short-term contracts. If you can evidence that your company has a good track record, your lender can consider taking your ‘daily rate’ rather than going by your net profit. It will be beneficial to contractors significantly, as lenders will consider treating you as if it’s more likely to work in your favour doing so. They’ll treat your case as self-employed instead.
Lenders will need you to provide information on how long your current contract is left, as this can influence their decision. They need to be confident that your income will continue as it is to get an accurate indication of whether or not you will be able to afford your mortgage. Even when you’re on your very first contract, it may still be possible to obtain a mortgage, though this all depends on your specific circumstances.
Can I still get a self-cert mortgage?
It is no longer possible to get a self-cert mortgage. These got heavily abused and caused significant problems for both the mortgage market and the economy. There are zero plans for these to make a return in the future.
Want to get in touch? We’d love to hear from you
We know that trying to get a mortgage as a sole trader, partner, or company director can be a tricky process, primarily down to evidence of your income. Whilst it can be much easier for an employed applicant, know that you have the same chance of getting a mortgage as anyone else with a similar income and credit score.
Depending on the lender you take out a mortgage with, some may have stricter criteria than the standard lender. Just another reason why approaching a trustworthy Mortgage Broker in Bristol could be genuinely beneficial to you and your goals.
We may be able to give you a realistic expectation from the start, guiding you through the self-employed mortgage process and providing support even beyond. Our reliable and determined mortgage advisors in Bristol can search through thousands of mortgage deals on your behalf.
Every customer has access to a free initial Mortgage Consultation, so make sure that you get in touch with one of our Mortgage Advisors in Bristol today. We will talk you through the most appropriate route for you to take based on your self-employment history.
Date Last Edited: December 6, 2023
