Mortgage prospects when self employed

roadrunnertwozero15

In the next 6 years im hoping to get a mortgage but I've recently started my own business - self employed, not a limited company where I pay myself a wage, I'm just a sole trader (a plumber), but I'm having doubts at my career choice now as will being self employed affect my likelihood in getting a mortgage?

Because surely it would be better if I was employed by a company with a regular salary paid into my bank on contract?

ellie27

Not sure what the difference is, but my husband is a plc rather than self-employed. We had no problem with mortgage, he had to provide last 3 years worth of accounts.

He is a contractor so can be out of contract for a couple months then have a contract for 6 months etc, but as said before they were only interested in last 3 yrs accounts papers.

marksoton

They'll be lenders, try posting on the mortgage sub forum.

A lot can happen in 6 years anyway....

Helvetica_Van_Buren

I'm a partner in a Limited Liability Partnership so am classed as self-employed. I recently successfully applied for a mortgage from HSBC. In addition to the usual application info, they needed 3 years' accounts. They say they want audited accounts but what they mean is final accounts that are signed by your accountant.

It takes a little bit longer to apply as all your info goes to an underwriter to assess manually. If your

Mine was slightly easier because I bank with HSBC; had I not, they would have had to do further checks but because they could see a regular income entering my account (as well as the other info), they were happy I could afford the repayments.

booksurr

the position for self employed is no different to that for an owner/director of their own Ltd company

a prospective lender will require sight of your accounts (typically over 3 years) if they were prepared by an accountant
OR, if not,
they will want to see your self assessment tax return acknowledgement to substantiate your income

kingstreet

Whether you are in a partnership, a sole trader or a director of a limited company, lenders will typically require your latest two years SA Online tax calculation sheets (or old style HMRC SA302s) PLUS the SA Online, or old-style HMRC issued Tax Year Overviews which show you have paid the tax which is due.

Whether you are dealing with director's remuneration and dividends, self-employed/partnership/sole trader drawings and net profits, these documents provide the evidence you need.

You can be asked for an Accountant's Certificate by some lenders.

Typically, lenders will take an average over the two years, or the latest year's if LOWER than the year before.

A very small pool of lenders will work on one year's trading and a small number of lenders will work from company retained profits, rather than director remuneration and dividends.

Conclusion - a good independent broker can decipher your situation and ensure you end up with the best lender for you.

[Deleted User]

3 years accounts, some lenders will accept 2.

My OH is a sole trader and he didn't have to get his signed by and accountant, he just had to give copies of his SA302's for each of his tax years and it all went through ok. Mortgage is with Virgin.

sheff6107

Deleted_User wrote: »

3 years accounts, some lenders will accept 2.

My OH is a sole trader and he didn't have to get his signed by and accountant, he just had to give copies of his SA302's for each of his tax years and it all went through ok. Mortgage is with Virgin.

Just a heads up that Nationwide state this, and then when you apply they mess you around and want certified accounts. Not to mention they're complete pains in the backside to deal with ("we won't accept this piece of paper because it says 'flat 68' and the other piece of paper says 'apartment 68'")

STAY CLEAR OF NATIONWIDE IF YOU ARE SELF EMPLOYED.

booksurr

kingstreet wrote: »

(or old style HMRC SA302s)

thanks, had a senior moment and could not remember the number.

might be "old style", but still called that by HMRC and now available online

https://www.gov.uk/sa302-tax-calculation

kingstreet

Yep. The online Tax Calculation actually is designated SA302, but you don't have to go through the rigmarole of getting it from HMRC now.

Accountant software can also produce them if you use one to submit your returns.

MandM90

My broker got me a mortgage after 1 years accounts (self employed like you). I did have a hefty 20% deposit, though.