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Self-Employed Mortgage Applicants Face Rejection

MORTGAGES | 25.08.2021

Getting a self-employed mortgage isn’t easy at the best of times, let alone when you throw a pandemic and furlough into the mix. Self-employed mortgage requirements from lenders are becoming increasingly difficult to meet, and as a result, more than a third of applicants believe they’ll never be able to purchase a home. Let’s take a look at how we can help boost your chances of getting a mortgage when self employed.

Refused mortgage due to self-employment grant

Some providers refuse self-employed mortgage applications from those who have used the Self-Employment Income Support Scheme (SEISS) as it could be a sign that their employment is uncertain or that they’re experiencing financial difficulties.  Two lenders said they would need to see evidence of the business having recovered from the pandemic, such as a good turnover. But as mortgage providers usually look through the last two years of accounts to calculate how much was earned, the pandemic could still be impacting self employed mortgage applications until 2023.   However, not every lender will reject your application outright. Some won’t see SEISS usage as an issue, so it’s important you find the right mortgage provider to improve your chances of being accepted. This is something our expert mortgage advisers can help with. They know exactly which self employed mortgage lenders are most likely to understand your situation and provide the best rate available. 

Self-employed mortgage rules

New self-employed lending criteria have been introduced by lenders as a result of the Coronavirus pandemic. These include providing:
  • At least two years of accounts signed off by a certified or chartered accountant.
  • Evidence of consistent or increasing profit over a number of years.
  • SA302 forms or a tax year overview for the past two or three years
  • Upcoming contracts (if you’re a contractor)
  • Dividend payments or retained profits (if you’re a company director)
As with any other mortgage application, you’ll also need to provide: 
  • ID
  • Council tax bill
  • Utility bills dated within three months
  • Six months of bank statements
Having a large deposit and an excellent credit rating really boosts your chances of being accepted for a self-employed mortgage too. 

Mortgages for self-employed with 1 year’s accounts

If you’re newly self-employed, getting a mortgage can be very tricky, but not impossible. Your choice of products will be limited when obtaining a mortgage with less than two years account, and you’ll need to provide proof of regular work or future projects. 

Self-employed mortgage calculator

To give you an estimate of how much you’ll be able to borrow as a self-employed person, take a look at our online mortgage calculator. For a more accurate idea, we recommend that you speak to one of our expert mortgage advisers.

How to find the best mortgage deals for the self-employed

Getting a mortgage when self-employed is much easier when using a specialist broker. At TaylorMade, our team understands just how difficult it is to get accepted by mainstream lenders. That’s why we search the market to find the most suitable lender with a competitive interest rate to ensure you’re getting the best deal possible. Contact us today to start your self-employed mortgage application.
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