The Areton ltd specialises in assisting self-employed individuals in obtaining the mortgages they want.
We have a wealth of experience and knowledge of how each lender evaluates your mortgage application, from huge high street banks and building societies to smaller, specialty lending firms that aren’t widely publicised.
You’ll be able to find the exact self-employed mortgage you need to fit your individual circumstances and requirements thanks to our expertise and assistance as a specialised self-employed mortgage provider.
How to make obtaining a Self-employed Mortgage easier
If you’re self-employed, achieving all of the conditions set forth by mortgage lenders may appear to be an uphill battle, especially since the implementation of more stringent lending regulations in the aftermath of the financial crisis of 2008–9.
Persons in typical jobs can show their income by showing paystubs and bank statements from the previous three to twelve months, but freelancers, contractors, and other self-employed people aren’t in the same position.
However, many mortgage lenders have realised that their lending policies must become more flexible in order to meet the growing demand and requirements of a growing segment of the population who choose self-employment, and it is entirely possible for a self-employed person to obtain the mortgage they require. We’ll go over some of the strategies you can use to make getting a self-employed mortgage easier in the sections below.
Finding a Self-Employed Mortgage
Even for people who are not self-employed, finding the correct mortgage lender can be tough. Choosing between a variety of high street mainstream lenders such as banks and building societies, as well as smaller specialised lending organisations, may be a difficult task–each will have its own mortgage programmes, lending criteria, and processes for evaluating candidates.
Contractors, freelancers, and other self-employed individuals may find the hunt considerably more difficult. The way lenders analyse self-employed income varies by location, with some being more’self employed friendly’ than others.
Company Director Mortgages
It’s odd that company executives have a harder trouble getting a mortgage than the people they pay to work for them.
You may have noticed that traditional lenders use criteria that aren’t especially well suited to self-employed applicants, and even less so to limited company directors, whose finances are often more complicated.
It might be difficult to know where to start when looking for a reasonably priced mortgage if you conduct your business as a limited company.
We’ll go over some crucial points in this section.
Mortgages for Directors
Despite what you may think from walking down the street, you can discover lenders who are confident and prepared to grant you a mortgage on fair terms as a company director. These are usually smaller, specialised lenders who can be more flexible when analysing a company director’s salary, but they, like other lenders, will have their own standards for calculating mortgage affordability and looking at your revenues and assets when determining how much you can borrow.
With the exception of some professions (such as doctors and others who may demonstrate a contract as proof of ongoing and future revenue), most lenders will require your business to have been in operation for at least a year before applying for a mortgage. They’ll ask for at least one year’s worth of company accounts certified by a chartered accountant, and they’ll frequently ask for up to three years. If your tax year does not fall within the April-April HMRC pattern, they may be willing to examine a snapshot of the previous 12-month trade period rather than making you wait until the end of the current tax year to apply for a mortgage.
Construction Industry Scheme Mortgages
The Construction Industry Scheme (CIS) was established by HM Revenue & Customs to allow licenced contractors to deduct tax on subcontractor payments at the point of sale. This deduction is sent to HMRC and counts as a payment toward the amount of income tax and National Insurance that the subcontractor would owe after filing end-of-year accounts. Payslips reflecting gross and net income are normally provided by the contractor.
It is not obligatory for subcontractors to register for CIS, but if they don’t then a contractor will have to make tax deductions from their pay at a higher rate. The Government’s CIS guide for contractors and subcontractors has more detail on what is and is not covered by the scheme, and will contain up-to-date rates. Please note that some of the information on this page may have been superseded by new information from HMRC since the time of writing. Please check with HMRC to confirm any unanswered questions about CIS.
CIS Mortgage Advice
Subcontractors will be able to prove income using the gross amount shown on the payslips contractors provided them, rather than having to provide full business accounts and/or their SA302 form showing the year-end tax calculation from a Self Assessment tax return, as part of the application process for a CIS mortgage.
Applicants with less than two years of accounts are the most likely to profit, but keep in mind that not all lenders offer CIS mortgages, and those that do will have different criteria.
Rather than following a blanket set of guidelines, mortgage lenders will evaluate applicants on a case-by-case basis. To qualify for a CIS mortgage, you must present your CIS payslips for the previous three months, although in some cases, up to six months’ worth or more may be required. The mortgage lender will use them to calculate your average monthly income and, as a result, your overall annual number on which to base their assessment, and you may be asked to provide bank statements for the same time period for additional verification.