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While the path to securing a mortgage can appear a bit bumpy when you're self-employed, it's entirely within reach with a sound plan. 

Being the captain of your own ship brings along distinct financial implications when you're on the hunt for a mortgage. 

In this blog, we'll break down the step-by-step journey and smart strategies on how can self-employed get a mortgage. We're here to help self-starters like you anchor down a mortgage, turning the dream of homeownership from a distant wish into an exhilarating reality.

Step 1: Get Your Finances in Order

As a self-employed individual, showcasing your income and affordability through comprehensive financial documentation is essential. This documentation usually includes a few years' worth of tax returns, certified accounts, bank statements, and evidence of ongoing contracts or projects. Keeping your financial records well-organised will streamline the mortgage application process and demonstrate your financial stability.

Step 2: Build a Strong Credit Profile

A healthy credit profile is vital when applying for a mortgage. Lenders assess your creditworthiness to gauge the risk of lending to you. Timely bill payments, maintaining low credit card balances, and avoiding additional debt leading up to your mortgage application are crucial. Review your credit report for errors and address them promptly.

Step 3: Demonstrate Consistent Income

Lenders prefer to see a stable and reliable income when evaluating mortgage applications. If your self-employment income fluctuates, providing evidence of consistent earnings over several years will increase your chances of approval.

Step 4: Prepare a Substantial Deposit

A sizable deposit can significantly improve your prospects of obtaining a mortgage as a self-employed individual. It reduces the loan-to-value (LTV) ratio, making you an attractive borrower to lenders. Moreover, a larger deposit might lead to more favourable interest rates and terms.

Step 5: Seek Expert Mortgage Advice

Navigating the mortgage landscape as a self-employed individual can be complex. Engaging a mortgage advisor who specialises in assisting self-employed individuals is highly recommended. An experienced advisor, like those at RM Financial, can guide you through the process, identify suitable lenders, and find the most favourable mortgage deals for your specific circumstances.

Step 6: Consider Specialist Lenders

While many mainstream lenders have strict criteria for self-employed borrowers, specialist lenders cater specifically to this demographic. These lenders often have more flexible underwriting criteria and are well-versed in assessing the income of self-employed individuals. Your mortgage advisor can help you find and approach these specialist lenders.

Step 7: Provide a Generous Down Payment

A substantial down payment provides reassurance to lenders, demonstrating your commitment and financial stability. By reducing the lender's risk, a larger deposit enhances the likelihood of mortgage approval.

Step 8: Be Mindful of Taxable Income

Lenders typically base their assessment on your taxable income when evaluating mortgage applications. As a self-employed individual, you may leverage various tax deductions to minimize taxable income. However, it's essential to strike a balance. Maximising deductions can reduce your tax liability but may also lower the income figure that lenders consider, potentially affecting your mortgage application.

Step 9: Offer a Detailed Business Plan

If you're relatively new to self-employment or have recently launched a venture, a detailed business plan can be invaluable. The plan should outline your future income projections, client base, and growth strategies, instilling confidence in lenders about your ability to generate consistent income in the long term.

Step 10: Be Prepared for Scrutiny

As a self-employed individual, expect your mortgage application to undergo thorough scrutiny compared to salaried applicants. Be ready to answer additional questions and provide extra documentation to support your application. Patience and transparency will work in your favour during this process.

How RM Financial Helps Self-Employed Individuals Secure Mortgages

Securing a mortgage as a self-employed individual may require extra effort, but it's entirely achievable with proper preparation and expert guidance. 

At RM Financial, we specialise in helping self-employed individuals find tailored mortgage solutions. Our team of mortgage advisors will work closely with you, leveraging our expertise and extensive lender network to find the most suitable mortgage deals. Take the first step towards homeownership by visiting our Self-Employed Contractor Mortgages page or contacting us today. Let's collaborate to unlock the possibilities and turn your dream of owning a home into a reality.

Information was accurate at time of publication.
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