It is more difficult to get a mortgage if you are self-employed, when compared with employees. Self-employed people often have more erratic incomes and find it more difficult to prove their incomes.
In the past, self-employed people got round the problem of proving income by using self-certification mortgages, where you would state your income and a lender would take it on trust. However, too many people took out mortgages they couldn’t afford and these loans are no longer allowed.
All lenders will want to see proof of your income, often looking to see a track record over three years or more. That way it can take an average figure and smooth out any spikes.
Proof can take the form of accounts and tax returns, and the SA302 supplied by the HMRC.
Please remember that income means profit not turnover- if you’ve legitimately suppressed your profits to minimise income tax, this will work against you when applying for a mortgage.
The number of lenders also gets limited if your self-employment is based on being a professional landlord. This is because some lenders see this as a higher risk, as your income is related to the very thing you are mortgaging.
Self-employed mortgages are a bit of a minefield and you really need access to expert knowledge and contacts. We can help you.