Mortgage for the self-employed...

ziggy1976

Hello,

This is my 3rd year as a sole trader. The last time I applied for a mortgage I was in employment - I understand that the rules and criteria have (unfortunately) been tightened significantly since the banking bubble burst.

I have previously had a mortgage for 8 years (unblemished record) and have a sizeable deposit.

Basically it is only this year (Year 3) that I am turning over a decent amount to apply for the mortgage that I need and (hopefully) this is likely to be the case for subsequent years.

(1) How many times income are the banks likely to lend me? I understand that income is (unfortunately) based on the net figure after expenses etc have been deducted.

(2) As the first 2 years income not so great, am I likely to get a mortgage based on the best year (this year) or would I need to trade for another 2 years before they will lend to me?

(3) At the moment I am submitting my self-assessment tax returns online. Would this be sufficient as proof of income or would I need to produce audited accounts by an accountant?

(4) Is there anything else I would need to furnish to meet mortgage criteria for a self-employed person.

(5) If I have to wait another 2 years is there anything else, other than the accounts, that I could start getting in order to improve my chances of getting a mortgage.

Thanks in advance.

ACG

(1) - Getting beyond 4x income using the most recent set of accounts only could be a tough ask (not impossible but you are limiting your options).

(2) - You can do, but as above you will not have a massive choice of lenders.

(3) - You would need to request SA302s from HMRC. They are free and take around a week or 2 to arrive.

(4) - I dont understand the question. Generally speaking 1-3 years SA302s. 3 months bank statements, proof of ID/Address/Deposit are needed.

(5) - not really no.

Your going to need a broker for this, so I would personally just jump in and book an appointment to go and see one. Let them guide you for your circumstances.

kingstreet

Upto 5x your net profit, less the cost of dependents, credit etc. As net profit is the equivalent of gross salary for the employed (ie before tax and national insurance) this is fair.

Lenders will usually take an average of the last two years, but some lenders may consider you on a year's net profit alone.

You do not need audited accounts. You may need accounts signed by an accountant, or HMRC SA302 to evidence your income. If the latter, you will need to obtain it from HMRC with the covering issue letter.

No. Although some lenders may ask for an accountant's projection for the current year, in addition to normal requirements set out by ACG.

You should not have to wait. Appoint a whole market broker to act for you and get a view of what's possible and when.