The number of self-employed people in the UK is at a record high of around 4.2 million people, the highest it has been since records began in 1992. But whilst the number of people working for themselves is on the increase it can seem harder than ever for a self-employed borrower to get a mortgage.
A recent survey by Countrywide estate agents found that one in ten people rejected for a mortgage were told this was because they were self-employed. And there is no doubt that self-employed people do have a few more hurdles to overcome than employed borrowers.
The extinction of self-certification mortgages, where a borrower could declare their income to a lender with few or no questions asked, has surely had an impact here. But mortgages are far from off limits to self employed borrowers, lenders just want to see evidence that you will be able to meet your repayments on an ongoing basis.
And it’s not the same story with all mortgage providers; some will be more flexible than others. Granted if you have two to three years worth of healthy certified accounts or tax returns to hand then you are more likely to be received with open arms. But not having this information needn’t mean you are automatically turned down.
Just a quick glance over lending criteria from a few of the biggest mortgage lenders highlights significantly varying expectations. Whereas some will accept nothing less than two years of documentation from HMRC others are happier to work on a case by case basis. So if you have a different way of demonstrating your ability to pay such as large amounts of savings or contracts for future work this may be enough for some lenders.
A good independent mortgage broker, like Which? Mortgage Advisers, will know which lenders are likely to be sympathetic to your situation and which are not. As well as being able to point you in the direction of specialist self employed mortgage products and lenders. And if it’s a remortgage you’re after and you have a good track record with your current lender speaking to them is probably a good place to start.