Mortgage advice for the self-employed
Being self-employed doesn’t have to be restrictive. When it comes to mortgages for the self-employed there are hundreds of lenders in the marketplace to choose from. Whether you are looking at limited company mortgages or self-employed mortgages, we can find a solution to get you the funds you need. Here are 9 ways we can be creative to get you the funding solution you require.
Contractors can use their day rate
If you are a contractor but pay your own tax and national insurance, then there are lenders who will take your day rate and multiply it by 48 weeks. This could mean that you would be able to borrow more than if you simply look at your tax calculations and use earning from self-employment.
Use retained profits
There are lenders who will take retained profits in to consideration when they look at your limited company earning. The most generous of these lenders will use your salary plus the retained profit before tax. If you don’t take as many dividends as you could do and you prefer to leave the profit in the business, this will allow you to borrow more.
Working off of the the latest years income
If last year was a particularly good year, we have lenders who can use the latest years figures. Most lenders will look at the average of the last 2 or 3 years’ salary plus dividends. If in the previous year you had to spend money on a one-off payment such as purchasing new premises or a van, and this year you have seen this investment materialise, it means you can take advantage of this, rather than having to wait an extra year.
Making use of an average of three years income
There are lenders who will look at the average of 3 years figures. If 2016 was a good year, and so was 2018, but 2017 was a little lower due to time of due to illness or the birth of a child, or a significant outgoing such as purchasing new premises or a van, then averaging the figures over 3 years might allow you to borrow more than you previously thought possible.
Change of self-employed status
Have you recently changed from a sole trader to a limited company? There are lenders who don’t need you to have completed your first year as a limited company before they accept your income. If business is going well and you simply decided to make the step up, then with an accountants reference and your latest 2 years Tax Calculations and Tax Year Overviews, will use your previous income.
Reducing income not a problem
Has this year not been as good as last year? There are still lenders who will use your latest years figures, even if they are reducing. Just because this year hasn’t been as good as last year, it doesn’t mean that you wouldn’t be able to get a mortgage.
Need some extra money to invest in your business?
As long as you aren’t using the funds to pay a tax bill, lenders are generally happy for you to purchase new equipment or invest in the business.
Lending into old age
If you are getting nearer to retirement but have no set age that you intend to stop working, there are lenders that don’t have a maximum age for their customers. If it is justifiable, there are lenders who will lend past age 85.
Multiple sources of income
If you have a property portfolio in the background and the rental income is declared on your tax calculations, there are lenders who can take this income into consideration on top of your earned income. This means you would be able to borrow more than if we just look at your earned income alone.
When it comes to limited company mortgages, you need to be in a strong position of understanding to get the best deal. The same applies to self-employed mortgages. Speak to the experts – contact Fox Davidson today.