Are you a self-employed go-getter struggling to get your foot on the property ladder? You’re not alone, mate! Nearly half of the self-employed folk who’ve tried to nab a mortgage have had their applications tossed in the bin. But don’t fret, because I’m here to help you navigate the choppy waters of mortgage applications and increase your chances of getting that coveted ‘yes’.
The Self-Employed Mortgage Conundrum
Let’s face it, being your own boss is brilliant, but when it comes to mortgages, it can be a right pain in the backside. Lenders often view self-employed individuals as riskier prospects, mainly because our incomes can be as unpredictable as British weather1
Who’s Getting the Short End of the Stick?
While sole traders seem to have the best luck, with two-thirds getting the green light on all their applications, it’s our mates on zero-hours contracts who are really feeling the pinch. Almost two-thirds of these workers have had some or all of their mortgage applications declined. Talk about a raw deal!
Why Are Lenders Giving Us the Cold Shoulder?
There are a few reasons why lenders might be turning up their noses at self-employed applicants:
How to Boost Your Chances of Mortgage Success
Now, let’s get down to brass tacks. Here are some top tips to help you charm those fussy lenders:
1. Get Your Ducks in a Row
Before you even think about applying, make sure you’ve got all your paperwork sorted. This means having at least two years of accounts ready to go. Remember, preparation is key!
2. Check Your Credit Report
Give your credit report a once-over to make sure there aren’t any nasty surprises lurking in there. A good credit score can be your golden ticket to mortgage approval.
3. Seek Professional Help
No, not that kind! I’m talking about mortgage brokers. These financial wizards can work wonders in finding lenders who are more self-employed friendly. Plus, many online brokers offer their services for free. Bargain!
4. Consider Smaller Lenders
While the big high-street banks might give you the cold shoulder, smaller lenders can be more flexible. Just keep in mind that they might charge higher rates.
5. Be Realistic About Your Borrowing
Remember, lenders will look at your declared income, not what you think you can afford. So, if you’ve been a bit too clever with your tax returns, it might come back to bite you when applying for a mortgage.
The Light at the End of the Tunnel
Despite the challenges, there’s hope on the horizon. Some lenders are becoming more accommodating to self-employed applicants. For example, a few will now consider your share of pre-tax net profit plus salary with just one year’s accounts. Now that’s progress!
Wrapping It Up
Getting a mortgage when you’re self-employed might feel like trying to nail jelly to a wall, but it’s not impossible. With the right preparation, a bit of expert help, and a dash of perseverance, you’ll be picking out curtains for your new gaff in no time.
Remember, being self-employed doesn’t make you any less deserving of homeownership. So, chin up, get your paperwork in order, and go show those lenders what you’re made of. After all, if you can run your own business, you can certainly handle a mortgage!
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Author:
Founder and mortgage and protection adviser in Albion Financial Advice
Dariusz Karpowicz is a seasoned adviser in the financial services industry. After gaining valuable experience working with an established broker, he founded his own practice, Albion Financial Advice. This firm is dedicated to assisting clients in acquiring properties and advising on various mortgage options. Born and raised in Gdańsk, Poland, Dariusz moved to the United Kingdom in 2006.
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