Mortgage advise for the self-employed
When it comes to self-employed mortgages, it’s easy to get caught up in the requirements, requests and recommendations of others.
Being prepared is the best way to avoid undue stress.
So, to help, here are Fox Davidson’s 10 self-employed mortgage tips.
- Use a qualified accountant rather than a bookkeeper. Mortgage lenders will only accept proof of income from a suitably qualified accountant.
- Where possible don’t change trading style just before you are about to apply for a mortgage as this will complicate matters.
- Sole Trader or Partnership? If you are about to submit your tax return give a thought about the net profits you will show and the mortgage you will need. Speak to a mortgage adviser to see how your net profits will affect the amount you can borrow.
- Limited company directors! Don’t worry about taking dividends out of your company if you don’t need them. A good broker will use your net profits as proof of income. We have a proven track record of securing mortgages for company directors.
- Consider an offset mortgage. You can make your tax savings or retained profits work for you by placing them in a savings account linked to the mortgage.
- Credit Score query? For all self-employed mortgages (as with any mortgage) a good credit score will help you get the most cost-effective terms.
- Deposit. The larger the deposit you have the better the interest rate will be. Rates generally improve every 5% of deposit you have all the way up to 40% deposit.
- Get your business and personal bank statements in order. Lenders don’t like pay day loans, gambling and other similar entries.
- Don’t waste time with online comparison sites as their knowledge doesn’t go deep enough and any credit checks done may harm your credit rating.
- Use an Independent Mortgage Broker that can approach the market including high street banks, private banks and building societies as well as specialist broker only lenders. A good broker will place the lending with the right lender, first time.
We’re confident that these 10 tips will help you on your way as you look to secure a mortgage as a self-employed tradesman or limited company business owner. Have more questions? Feel free to give us a call.
To find out more about self-employed mortgages, contact the experts at Fox Davidson today.