Documents Needed for Self-Employed Mortgages

What Documents do I need for a Self Employed Mortgage?

Getting a mortgage as a self-employed professional is possible, but the process does not come without certain obstacles that are impossible to ignore.

Indeed, proving your income and convincing your lender that you are a safe bet for their investment can be challenging without the right guidance from a specialised broker.

Many lenders will struggle to understand the earning potential you can see now, and to make sure they know that your business is stable is crucial. Here is what you’ll need for a successful application.

Same Financial Products, Different Income Assessment

First off, it is worth making clear that there is not yet a financial product designed explicitly with the needs of self-employed professionals in mind.

Indeed, you will need to apply for one of the mortgages that are also available to employees under the PAYE scheme. However, for them, proving their income is a relatively straightforward process.

Instead, if you are self-employed, proving your income will come down to gathering all the documents related to your business and showing that your accounts are in order.

While the process differs, getting the mortgage you want is possible – by putting your case in the hands of a trusted, specialised broker.

What Specific Documents Do You Need?

When first applying for a self-employed mortgage, ideally you will have been trading for three years and be able to provide two years’ worth of accounts and/or self-assessment tax returns. Getting your first application approved is crucial to prevent your credit score from being damaged. So, this is what you need to have before the application.

Prove Your Income With a Self-Assessment SA302 Form

A self-assessment SA302 form is a document you can request from the HMRC. This form shows all of the taxes you have paid and the ones that are due. Also, it includes your previous years’ income and profits.

It can be an excellent way to prove your income and the fact that you have been trading for at least two years.

Show Two Years of Accounts

A lender will need to know that your company is stable, and it is forecasted to stay in business for years to come successfully. So, providing your business’ accounts is essential to show that your company has been growing and has remained stable over time.

It is recommendable to partner with a chartered accountant who can complete these reports for you. However, borrowers should be able to understand the figures included in the report – and be able to talk a lender through them if needed! Indeed, it is normal for a business to experience dips in profits.

If you can justify such fluctuations, you can give off a better impression to your lender. There are instances where one year’s accounts can be considered. 

Bank Statements and Proof of Deposit

These are common documents requested during a mortgage application process. Your lender will need them to check on your finances and make sure that your incomes and expenditures are in check.

How To Increase The Chances of Being Accepted by a Lender

As seen, convincing a lender to grant you a self-employed mortgage can be tricky. But, some tips can help you improve the chances of getting the answer you want.

Increase Your Income

If you can, increase your income. Many companies will retain profits that are often then reinvested in the company itself. However you might decide to increase the salary you pay to yourself or your dividends.

This will improve your financial case and may even increase the deposit you had planned to put down.

Keep Your Business Records and Accounts Up to Date

A lender will be looking for a beneficial investment for themselves. To convince them that you are one, you should portray your company or business in the best way. To do so, you should start by keeping your records and accounts in order.

Save for a More Beneficial Deposit

A larger deposit can help you increase your chances of getting the mortgage you need. While the minimum required to secure funds is 5%, you are likely to need between 10 and 20% of the property’s value. A larger deposit than this can help you improve your chances of securing the funds.

Save Your Business Changes for the Future

As seen, lenders are more likely to trust a stable company. If you are planning to change the nature or internal structure of your company, you should consider doing so after your mortgage is secured.

How Can a Specialised Mortgage Broker Help You With Your Documents if You Are Self-Employed?

Obtaining the mortgage you need as a self-employed professional can be challenging. Leveraging the experience and knowledge of an expert and specialised advisor can help you streamline the process.

Indeed, a broker will do the legwork for you, simplifying the jargon and booking in your appointments when they are more convenient for you. And, they will advise on all the documents you need so you can prepare before meeting your lender!

Your home may be repossessed if you do not keep up repayments on your mortgage.