Self Employment Mortgages
If you are self-employed, you may be wondering how you might secure a mortgage. Would the process be the same? Should I prepare differently? The true answer is that there are some slight differences when trying to acquire a mortgage while self-employed.
At JG Mortgage Services LTD, we have specialists in a wide range of mortgage services that can help you with the most challenging parts of the mortgage process. For self-employment, we offer guidance and support where we see fit.
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What Makes Self-Employment Mortgages Different?
Self-employed mortgages are no different from any other mortgage. That is to say that they are not a completely separate service, they are the same types of mortgages that anyone else might get.
The main difference for self-employed people is that many lenders may require additional documentation for you to prove that you can afford the mortgage and will be able to pay it off consistently.
When Will I Be Considered Self-Employed?
The definition of self-employment can be difficult to pinpoint. Typically, you will be considered ‘self-employed’ if you:
- Have a trade, profession or vocation.
- Are in business on your own account.
- Are responsible for the success or failure of that business.
Why Are Self-Employed Mortgages So Difficult?
Securing a mortgage while self-employed can often feel more challenging than for those in traditional employment. This is mainly due to the way lenders assess income and financial stability.
Unlike typical employees who can provide pay slips and steady employment histories, self-employed applicants must rely on accounts, tax returns, and business performance.
No Guaranteed Income
One of the biggest hurdles self-employed individuals face is the absence of a guaranteed income. While employed applicants have regular paychecks, those who are self-employed may experience income peaks and valleys, depending on the nature of their business.
This unpredictability makes lenders more cautious. Many lenders prefer stability, and without the assurance of a steady monthly income, applicants may find it difficult to convince lenders that they can meet regular mortgage payments.
Demonstrating income stability over several years through tax returns and business accounts becomes critical in such cases.Affordability Issues
Affordability is another common issue for self-employed applicants, primarily due to how income is calculated. Lenders often base affordability assessments on taxable income rather than gross earnings.
This can be a problem for many self-employed people who reduce their taxable income through business expenses and deductions. While these strategies can lower your tax liability, they can also negatively impact the income figure used by lenders to determine what you can afford.
This mismatch between actual earnings and what is reported for tax purposes can limit the mortgage amount you’re eligible for.
Inexperience With Lenders
Many self-employed applicants find themselves at a disadvantage simply because they don’t have the same experience navigating the mortgage market as employed borrowers.
Traditional lenders may not fully understand the nuances of self-employment income, and without the right guidance, many self-employed individuals struggle to present their financial situation in the best possible light.
Inexperienced lenders may apply rigid lending criteria that don’t accommodate the unique circumstances of self-employed applicants, leading to rejections or less favourable terms.
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Recently sorted our remortgage with JG Mortgage Services and i really couldn’t be happier with the amazing service by Josh & Joel. It has been such a stress-free process to what I have experienced in the past. There has no need to chase for updates etc, Josh/Joel have been in contact with me straight away via email or WhatsApp. Any questions I’ve had have been answered promptly, the service has been truly impeccable. I loved how all figures sent to us were super easy to understand so we understood exactly what out finances would look like. Josh even managed to reduce our interest rate from what was originally advised with our provider which we are delighted about. This for me shown just how they go above and beyond to help their customers to the best of their ability. The service provided and dedication to customers is very important to JG Mortgage Services and this 100% shines through on their work.
Highly recommended and we will certainly be in touch when our mortgage is next due. If you are looking for a mortgage advisor I would highly recommend JG, for me there will be no other options to use going forward.
Kelly & Carl J – 17/11/2022
How Can JG Mortgage Services Help?
At JG Mortgage Services, we understand the different challenges that self-employed people experience when applying for a mortgage.
With our expertise and personalised approach, we can assist you in managing those complicated regulations and obtaining a mortgage that meets your needs. Here’s how we can help:
- Expert Knowledge of Lender Criteria
- Tailored Advice and Support
- Access to Specialist Lenders
- Making the Most of Your Affordability
- Personalised Service from Start to Finish
By working with JG Mortgage Services, you can be confident that you’re working with experts who understand the self-employed mortgage market and are committed to assisting you in achieving your homeownership goals.
Expert Advice
Our team of experienced mortgage advisors possesses in-depth knowledge of the mortgage market, ensuring you receive personalised guidance tailored to your unique needs and circumstances.
We stay up-to-date with the latest trends and regulations in an ever-evolving mortgage market to provide you with expert advice and guidance every step of the way, always updating you on trends and changes when they happen to keep you in the loop.
This helps us provide you with informed advice and proactive recommendations to navigate the complexities of the mortgage landscape confidently.
You can trust us to keep you informed of any relevant trends or changes as they occur, empowering you to make well-informed decisions that align with your financial goals.
Tailored Solutions
We take the time to understand your financial goals and objectives before recommending any remortgage solutions, recognising that your financial situation is unique. That’s why we prioritise understanding your individual needs and objectives before proposing any remortgage solutions.
Whether your goal is to save money on your monthly payments, release equity, or consolidate debts, we work with you to find the right solution for your needs.
By collaborating closely with you, we ensure that the remortgage solution we recommend is tailored to your specific circumstances, maximising its effectiveness in helping you achieve your financial goals.
Transparency
Exceptional Customer Service
Common Questions About Self-Employed Mortgages
Since self-employed mortgages can be a fairly difficult topic to fully understand, here are some of the most common questions that we are asked:
How Long Do I Need to Be Self-Employed to Get a Mortgage?
Most lenders prefer to see at least 2 years of accounts, but some may consider applications with only 1 year of accounts. The longer you’ve been self-employed, the better.
What documents do I need to provide?
Typically you’ll need to provide:
- 2-3 years of certified accounts or tax returns (SA302 forms)
- Evidence of upcoming contracts/future work
- Bank statements
- Proof of address and ID
Do self-employed people pay higher mortgage rates?
Not necessarily. If you can prove your income and affordability, you should qualify for the same rates as employed applicants.
Can I get a mortgage with irregular income?
It’s possible, but you’ll need to demonstrate your average income and ability to make repayments.
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