What do the lenders look at when you are self employed

Harley1_2

Hi

Myself and my boyfriend are looking to buy a property between £150,000 and £170,000, we are both first time buyers, both have a good credit history and have our required 10% deposit. I am employed and on £19000 per year but he is self employed.

What do lenders require when you are self employed and trying to get a mortgage? He has had the business for 3 years and every year has turned over a profit!

Any advice will be much appreciated as a bit worried if we will even be able to get a mortgage!

Thank you

harvey115

It would be beneficial for you to get in touch with a good broker at first.

In terms of self employment - you would need:
- Last 3 years accounts
- SA302 for the last 3 years
- Bank statement for the last 6 months, personal and business
- The declared salary through SA302 will be considered to check affordibility

Basically both of your salaries will be combined together and considered for affordibilty. You would typically be looking at 4 times the annual combined income for the amount you can borrow. So if your husband has declared around £20K as annual salary you should be fine.

Harley1_2

That's great, thank you so much for your advice.

His wages do differ each month depending on what work has come in, do the lenders take into account what money is put back into the business each month? As at least £1800 is put back into the business each month but his wages can differ! I was wondering how they would calculate his earnings if his wages are different every month and someone had told me that they also look at what goes back into the business each month.

Also do you have to pay mortgage brokers or do they take a percentage from the lender?

Thanks again

Dave_Ham

The key figure is what he has annually paid tax on. It will be on his SA302's which more lenders are requesting more often these days.

Brokers work in different ways, some will be paid by the lender in commission or a fee and lender commission (whole of market)

Others will charge you a flat fee and if the most suitable lender pays commission, then this will be rebated to you (Independent)

Given you are first buyers and with one self employed, a broker may be a good selection.

Try and get a recommendation from friends and family though..

Harley1_2

Thank you do much for your help and advice!

It very much appreciated