Mortgage Tips for the Self Employed
Applying for a mortgage can seem tricky if you are self-employed, as many mortgage providers would prefer to deal with people who have a ‘regular’ salary paid by an employer. However, that doesn’t mean you can’t still get on the property ladder if you are self-employed. Here are some tips that can help you make sure your mortgage application is successful:
1. Use a mortgage specialist that understands the self employed market
Many call centre staff or agents working for mainstream lenders may be unfamiliar with dealing with self-employed when it comes to mortgage applications, so if you fall outside of their standard conditions for qualifying for a mortgage then you may be given short shrift.
Working with a broker that understands the unique finances of the self employed can make this step much easier, as they can find you the best deals from lenders who understand that just because you are not ‘employed’ in the traditional sense, it does not mean that you are necessarily a high risk.
Our recommended mortgage partner, Contractor Mortgages Made Easy (CMME), is experienced at dealing with self employed workers and contractors and its staff know how to find the best deals that suit your circumstances. This means you won’t waste time going to high street lenders who won’t deal with you, instead you can be put straight in touch with those that will.
CMME has also secured specialist underwriting terms from some of the biggest lenders on the market, meaning they can offer you a mortgage based on the value of any contracts you have in place, rather than the traditional approach of requiring three years of records of your historical earnings as a freelancer. This can really simplify things by just requiring you to bring in a copy of your relevant contracts, bank statements and appropriate ID.
2. Build up as big a deposit as possible
The credit crunch put an end to the days of 100 per cent mortgages and now the bigger deposit you can offer, the better mortgage rates you will get. You can now get mortgages around the 95 per cent mark if you look for them, but most lenders will still require a minimum of a 10 per cent deposit and the more you can put towards it, the lower your interest rates will be. If you can obtain between 10 per cent and 25 per cent of the value of the property, then that will put you in a strong position. The higher the deposit, the lower risk you are considered to be, so you get lower interest rates and therefore lower monthly repayments to be made.
3. Keep your credit rating under control
Any request for lending will be subject to a credit check, so even if you can prove regular income and have a deposit, your chances of securing a mortgage will be lower if you have a poor credit rating. This means keeping up with all your credit card or other loan repayments and making sure all your records, such as your details on the electoral roll, are all up to date.
4. Keep your contracts accurate and in date
Proving the security of your earnings will be essential, so contracts with your clients can be vital to helping you secure your mortgage. This means you will need to provide the lender with a copy so you need to make sure it is signed, up to date, and clearly states the length of the contract and what your rate of pay will be. This is all the sort of information that CMME will put together to support your application, so it pays to keep everything up to date.
5. Stay within your limits
Being offered a mortgage that you realistically might not be able to afford will only lead to big problems down the line, so it is crucial that you are realistic about what you aim for. Affordability plays a big part in assessing how much you may be entitled to borrow, but make sure you take into consideration all of your regular outgoings and expected earnings when working out how much you can put towards a mortgage each month. You can never predict what will happen to interest rates, so be aware that your repayments may be higher in six months time than they are to start with, so make sure you are clear and understand exactly what you could be expected to pay each month and be sensible when assessing whether or not this is affordable for you. Again, expert advice from CMME can not only help you find the right mortgage for your circumstances when you apply, but it will also help you assess your circumstances in the future as well.
Are you a freelancer looking at getting onto the property ladder, or keen to find out what mortgage you may qualify for? If so, then our recommended mortgage partner CMME can help find you the best rates and put you in touch with the lenders most appropriate to your circumstances. Contact them on 01489 555080, by email to firstname.lastname@example.org or using the online form below:
Contractor Mortgages Made Easy is a trading name of Mortgages Made Easy Limited. Authorised and regulated by the Financial Conduct Authority (FCA reg. 414798).Registered in England No. 4886692 Registered Office: 9 London Road, Southampton SO15 2AE.Your home may be repossessed if you do not keep up repayments on your mortgage.