Self-Employment is always on the rise, which in turn brings a rise in Self-Employed Mortgage Applicants in Hull. This is down to changes in work life in Hull and the world around us. There are now more opportunities than ever before to work from work, to start a business and more. As a dedicated and knowledgeable Mortgage Broker in Hull, we rarely see people planning to stay with their first employer from their first year, all the way through to retirement. They want to change their jobs to improve their personal development and financial situation.
There are lots of opportunities for the self-employed and freelancers within the Digital and Engineering sector. This is down to the world becoming more and more interconnected. We are constantly learning which opens more and more opportunities for the self-employed within these industries.
It used to be difficult for Self-Employed applicants to obtain a mortgage. However, with Self-Employment now becoming a lot more common and a lot more gaps opening up in the market, lenders have become more relaxed and lenient with self-employed applicants. The process of applying for and obtaining a mortgage as a Self-Employed applicant is now a lot easier than it ever was in the past.
To get you ahead of the curve when it comes to your mortgage, we have put together a small collection of some helpful mortgage guides, to support anyone from Self-Employed mortgage applicants to those thinking of Moving Home in Hull. Whether you have been in this game before or you are First-Time Buyer in Hull, we are sure that you will find the assistance of a trusted mortgage broker in Hull beneficial.
The minimum you will need in order to obtain a mortgage is one year’s accounts. If you go with a self-employed specialist lender, you will find that they often work off a single year. High street lenders tend to be a little stricter and will want two year’s accounts from you.
Unfortunately, statistics show that most new attempts at running a business end up being unsuccessful and this is why lenders always need you to evidence your track record, to prove you are reliable and have ‘staying power’.
Most lenders will look at the average of your last two years’ worth of income. Although, if your business has grown over the past year and the lenders can see that you will be able to afford a mortgage and run your company, they will go off the latest year and ignore anything that has happened previously.
If you are a director of your own limited company, then technically you are an employee of your own business. Lenders will not view it this way, however, and will only assess you as an employee if you own less than 25% of company shares.
Lenders often add the dividend you have drawn to your annual salary as a way to work out your earnings for the year. The amount that you can borrow for your mortgage will be based on a multiple of this particular figure.
You will find that from time to time, some lenders will work from your net profit rather than your salary/dividend. This works in the favour of company directors who like keeping their drawings low.
As a trusted and hardworking Mortgage Broker in Hull, this is a question that we find ourselves being asked all the time. During the meeting you have with your accountant each year, you will talk about how to minimise your tax liability. This works the other way when it comes to taking out a mortgage as a Self-Employed Mortgage applicant, wherein the more income you have declared, the bigger the mortgage you may find yourself able to obtain.
Whether it’s a Self-Employed Mortgage or not, a minimum of a 5% deposit is still required. It’s exactly the same as employees. If you only have one years’ accounts, you might find it more beneficial to put down a bit more deposit than what you initially would’ve, in order to increase your chances of succeeding. See our article to find out more on How Much You Need For a Deposit in Hull.
When it comes to looking at mortgage options for contractors, there are lots available. Nowadays, it’s a more common occurrence to find people working from short-term contracts. If you are able to evidence that your company has a good track record, your lender can consider taking your ‘daily rate’ rather than going by your net profit. This will benefit contractors greatly, as lenders will consider treating you as if it’s more likely to work in your favour doing so, they’ll treat your case as self-employed instead.
Lenders will need you to provide information on how long is left on your current contract, as this can influence their decision. They need to be absolutely certain that your income will continue as it is, in order to get a true indication as to whether or not you will be able to afford your mortgage. Even when you’re on your very first contract, it may still be possible to obtain a mortgage, though this all depends on your specific circumstances.
It is no longer possible to get a self-cert mortgage. These were heavily abused and caused major problems for both the mortgage market and the economy as a whole. There are zero plans for these to make a return in the future.
We know that trying to get a mortgage as a sole trader, partner or company director can be a tricky process, mostly down to trying to evidence your income. Whilst it can be much easier for an employed applicant, know that you have the same chance of getting a mortgage as anyone else with a similar income and credit score. Depending on the lender that you take out a mortgage with, some may have stricter criteria than the standard lender. This is why approaching a dependable Mortgage Broker in Hull, could be truly beneficial to you and your goals.
We are able to give you a realistic expectation from the start, guiding you through the self-employed mortgage process and providing support even beyond. Our reliable and determined mortgage advisors in Hull are able to search through thousands of mortgage deals on your behalf. Every customer has access to a free initial Mortgage Consultation, so make sure that you Get in Touch with one of our Mortgage Advisors in Hull today. We will talk you through the most appropriate route for you to take based on your self-employment history.