We find it very surprising how many people we speak to don’t think they can obtain a mortgage is they own a business or work for themselves. Lenders are aware of the situation self-employed people are in and they have a straight forward process in place to work out how much they would be prepared to lend. There is a process by which you can obtain a mortgage. In the case of sole traders and partners, the main criteria considered are the individual’s net profits while for a company director it’s their salary and paid dividends that are looked at. Lenders will vary the amount of time it is expected an applicant will have to provide evidence of income for. Most will look at the income received over the last two or three years and either average it out or take the most recent year as a basis for calculation. However, if you have a good profile, some lenders will make it possible to get a loan with just one year’s set of accounts.
Many self-employed people who work on a freelance basis often have income from various different sources. Freelance musicians, for instance, will be paid on a self-employed basis for much of their work but some of their teaching work will be on a PAYE basis with their income being taxed at source. This letter income will show differently on your SA302 form but with good justification and clear presentation, it will be treated no differently and should still contribute to your income for the year.
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