If you are self employed?

caz2006

Hi

For the first time ever I am going self employed.

Altough I will be earning at least 10K more than when I was employed I am worried on how this will impact me if I ever want to re-mortgage my house or even buy a second property.

What do mortgage lenders require when dealing with self employed individuals?

I am thinking of doing it the books on own rather than getting an accountant... What would potential lenders ask from you as proof of income and how long could it be before I am able to get a buy to let mortgage?

Cheers

Carole xx

pusscat

In my experience it depends upon the exact circumstances. I was an IT contractor working through both (at different times!) my own limited comany and an umbrella company on 3 month contracts - as is Mr Puss too. We have never had an issue getting a standard high street mortgage - it has always been worked out on a multimple of my/our/his hourly rate. The last one was obtained through a specialist "IT contractors broker", however, it had a low LTV and I also had a mortgage with the same comany as a permie. Mr P has had mortgages with several lenders as a contractor and has never had an issue.

Most high street lenders have now cottoned on that IT contractors are a safe source of business for a mortgage - not sure if this is the same in other industries though?

I think that even if you do your own accounts, they still haev to be signed off by a chartered accountant (but am not 100% sure?). Our accoutnant fees for the company are about £500 per year and he saves us far more than this by knowing about the right allowances to claim etc.

Hope this helps

Puss

UK007BullDog

If you are in IT you are treated completely different to anyone else working self employed.

Depending on the size and income of your business you can either do your own books (and you will have to show the lender your self assessment) OR you get a CHARTERED accountant to do the books for you.

The lenders prefer it from a chartered accountant. Some lenders will only accept books from chartered accountants.

Lenders prefer you working self employed for at least 3 years (and you have to prove your income) and obviously in a capacity like when you were fully employed.

Now if you don't want or cannot do the above preferred criteria there are lenders out there that will lend you with working just 1 day self employed, HOWEVER....... the rates are appalling, you are tied in with big fees if you wanted to leave early, plus if you were to remortgage in the future lenders will look a bit harder at your credit file, why you went with a lender like that.

Self employed also have to put down a bigger deposit, like 15% - 25% of your own money, to reduce the risk to the lender should they have to repossess the property.

UK007BullDog

However if you keep your own books and you know what you are doing you should be fine if you can prove your income with the self assessment docs.

Obviously the longer you work self employed the better the choice of lender you can pick from and once you have a full 3 years trading under your belt they will nearly all treat you like you were employed. So then no worries.