Documents Needed for Self-Employed Mortgages

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Documents Needed for a Self-Employed Mortgage   

While lenders don’t create mortgage products purely for self-employed people, you can access all of the same mortgage products as a PAYE employee. The main difference is in how you will prove your income.

Why do I need to prove my income for a self-employed mortgage?

Anyone applying for a mortgage to buy a home needs to prove their income as part of the process. It’s an important part of how the lender calculates how much to offer you: you can often borrow around four to five times your annual earnings. 

The only reason that getting a mortgage can be challenging for the self-employed is that proving your income is a little more complex. In general, however, most mortgage lenders are very welcoming towards the self-employed.

What documentation will I need?

Anyone applying for a mortgage will need to provide proof of ID and other documents such as :

  • Passport
  • Driving License
  • Council Tax bill
  • Utility bills from the past three months
  • Bank statements

When you’re self-employed you will often be asked for:

  • One or more years of accounts
  • Self assessment tax calculations– SA302 forms from the past one to three years
  • Evidence of upcoming contracts (if applicable)
  • Statements of dividend payments or retained profits (if applicable).

The requirements will vary depending on the mortgage lender. 

How will my income be assessed?

There are generally three types of self-employed workers: sole traders, partners and 

How your income will be assessed is usually related to how your business is set up:

Sole Trader

Sole traders usually declare their income by providing SA302 tax returns.

Partnership

If you are in a partnership, you will need to show your individual share of the profits. This may be through company accounts or tax documents. 

Limited Company

As a Limited Company you will need to provide two to three tax years’ accounts stating your salary and dividends. Some specialist lenders will also accept the net profits in your business as income. 

How do you improve your chances of being approved by a lender?

As well as assessing your income, lenders will also look at your credit score. Minor debt issues like late credit card payments are not usually a barrier to a mortgage, but more serious debts can mean higher interest rates and fewer lenders to choose from.

If you can put down a good deposit you will be much more appealing to a lender, and you should gain lower interest rates. If you can contribute 15% of the property value or more you will reduce your monthly mortgage repayments. 

Finally, be clear about the documents that are required and have them ready before you apply for the mortgage.

How can a Mortgage Broker help me prepare documents for a Self-Employed mortgage?

A Mortgage Broker like Fancy a Mortgage is here to take the hassle out of finding and applying for a mortgage.

We’ll explore your situation and recommend the lenders and products that will suit you best. We’ll also confirm which documents you need for your mortgage application, to get you fully prepared. 

We are registered with the Financial Conduct Authority and registered in England and Wales, so get in touch today for a free initial consultation.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.