Self employed mortgages are possible!

apositivethinkingcat

This is a bit of info from my own journey to getting a mortgage (and then a remortgage) as a self employed person. With tips on how I managed to get the best deal.

Go Ltd - It's more tax efficiant, you can register for voluntary VAT on their incentive scheme which pays back a percentage, you seperate work and personal liability, if your company grows you won't get caught out by swapping from sole trader to Ltd and your bank only counting the books from the 'most recent job' (I got hit with that one!)... so the sooner you do it, the more years of books you have for your mortgage or remortgage.

Get an accountants - I use Crunch (Code blinkrw5fc gets you a £25 amazon voucher for joining) they manage my books and end of year paperwork for a monthly fee. They also contribute later on...

Pay yourself a direct debit of the same amount each month from the company to your personal account - banking systems view consistant amounts on consistant dates as ongoing income. If you transfer a higher amount than you need for 6 months leading up to your mortgage some computers will take that as your income - so saving up porfit then paying it out over 6 months can make you appear to earn a high amount annually. Usually self employed people take out the minimum or varied amounts which makes it looks like we can only afford a lower mortgage than we actually can.

Get a super high credit rating. Get a credit card with a low limit, set it to auto-pay itself off. Set up all your bills on direct debit so you can't miss them. Pay off any debts you have if you can. Look at online lenders such as Zopa.com who offered me a much lower rate than the bank for my debt saving me a few thousand overall. Also you can overpay as much as you want, whenever you like.

Close other cards, reduce overdrafts or remove them, this is viewed as potential debt and taken off the total you can borrow, so if you aren't using it, cut it up and close the account.

Bank with the bank you want the mortgage from.
Move your current account, savings account and business account to the bank you want your mortgage from. This means they can see and verify everything you say easily. Also banks give better deals to customers with current accounts.

Have savings - even if it is a very small amount. Having savings shows you aren't pushed to the limt, plus its always good to have savings to may things like mortgage product fees!

Keep books up to date. Keep copies of your full end of year accounts from yoru accountant. Also... When you apply for your mortgage get a projection letter from the accountants for that year - it helps reassure mortgage lenders that your earnings will continue and also proves your income up to the current date even though you are mid financial year. Win-win

If you have a mortgage already, or a loan with your bank. Overpay even a tiny bit... if you can overpay a little (even £30-£50 on your mortgage a month) it shows you are easily making your payments on the current debt in your name.

Know your credit score - use the free experian deals to check your rating - phone up and talk to their advisors - if there are errors on the report get them fixed - if you show as potentially linked to someone (old room mate, old partner etc) put on a note saying that you are no longer connected to them financially. You can do a lot if you talk to people. Even if you missed payments and have a black mark you can talk to them and the company who put it on and get it removed! Just be polite, decent and ask for help. People can be nice

Get to know your mortgage advisor - visit them and ask what you need to do to help your application. This not only helps you make sure you meet your desired lenders criteria but also helps them help you and helps speed things up when you go for your application.

I hope this helps someone - I had to figure it out on my own.