There are several forms of self-employment, some examples are Entrepreneurs who usually have many sources of income, like rental property, in addition to several businesses. Or, Contractors, that are employed on a project-by-project basis and could work across multiple contracts weekly. Also, Company Directors, receive their income from several income sources, such as dividends, and directors’ remuneration from the business.
Lenders will consider a person self-employed if the stake they have in a business exceeds 20%. Another consideration would the amount of income a person receives from the business.
The criteria to be approved by a lender for a mortgage if you are self-employed is dependent on individual circumstances. For example, contractors may also receive payment as PAYE. A Lender will also consider the type of property you are interested in buying, as well as the value and the deposit that you can put down.
However, there will be typical steps you can take to prepare for a mortgage application as follows.
Documents Ready and Approved
Finally, we would suggest getting all your paperwork in order, such as income sources, bank statements, and company accounts, you will ideally need two- or three years’ worth of certified accounts (some lenders will go off one year’s account if adequate business levels can be demonstrated). This will help a broker and lender assess your suitability for a loan.
It would also be prudent to assess your credit score, a simple rule of thumb, is the higher the better. However, if that is not the case, credit repair lenders could be an option.
Try to get an understanding of your account conduct, your credit history, transactions, frequency, and regularity of payments out. Consider also if any missed payments occurred, especially if payments are missed on one-to-many occasions, then there is a chance that a default on payment could be recorded against your credit report.
Speak to an Independent Broker
It would also be an idea to speak to an independent mortgage broker as they will have experience dealing with a range of mortgage applications. They will also be well versed with the types of lenders that provide mortgage products to those with complex incomes. They will also be able to advise on what your options are, and they will understand what a potential lender is looking for in an application.
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Attention: Late repayments can cause you serious money problems. For help go to moneyhelper.org.uk