Self-Employed Mortgage Advice.
Fox Davidson are a Bristol based mortgage broker and we work with self employed clients to secure self employed mortgages. Our clients include contractors, day rate contractors, sole traders, limited company directors and partners in law firms. Its safe to say that if you are in a self-employed position for tax purposes then we can help you secure a mortgage.
As a Bristol mortgage broker many of our clients are Bristol based and work in media or professional services. We work with clients to secure mortgages no matter how complex your situation.
Limited Company Director Mortgages.
We work with lenders that use net profits and salary rather than just dividends and salary. We can go one step further and utilise lenders that work from gross profit (before corporation tax) and lenders that take into account retained profits. We can also factor back in deductions suich as large lump sum pension contributions.
All cases are looked at on an individual basis; we are able to work with lenders that will use the latest years income only or take an average of several years. We understand limited company mortgages thoroughly.
Contractors.
Contractors can secure mortgages. All we require is a history or contracting or a current contract with at least 6 months left to run. If you are a contractor on a day rate we can place lending with lenders that will lend generously using an annualised figure based on your day rate.
We also secure mortgages for zero hour workers such as bank nurse mortgages.
Sole traders & LLP
For sole traders and partnerships mortgage lenders will work from the net profit as per your latest years tax calculation.
We can secure lending using just the one years figures.
Please note that lenders need your latest tax calculation to be no more than 18 months old.
Law Firm Partners.
Law firm partners income is treated in much the same way as a sole trader. The only exception is for new law firm partners. In the case of a new law firm partner we can accept a letter from the law firm confirming your expected earnings for the forthcoming year.
Self employed mortgages – Lenders perspective.
Mortgage lending policy on self employed mortgages varies considerably across the market. We work with over 100 lenders across the market and so even if you have been declined by a lender previously you should know that there are many more options in the market and there is usually a willing lender out there.
We can help clients with decreasing profits, 1 years accounts, an element of bad credit, just switched from sole trader to Ltd company. We have seen it all and are experts at self employed mortgages.
Trading History
Most lenders require 2 years trading history, a handful will accept 1 years trading history.
Fox Davidson can secure finance for clients with as little as 6 months trading history in a limited company. A lender would need to see that the change to a Ltd company followed a successful period of self-employment as a sole trader or in a partnership.
How much can you borrow?
Being a company director has many benefits when it comes to affordability. Fox Davidson can utilise lenders that will take your income at its highest point, profit before corporation tax, plus your salary.
Sole traders and partnerships will need to provide their tax calculations, income is based on the net profit figure as declared to HMRC.
Lenders use affordability models to determine how much you can borrow. If we were to convert this into an income multiple, we would expect to be able to achieve 5 to 6 times your income.
The table below shows how lenders treat income based on your self-employed status and the documentation required.
