Documents needed for Self-Employed Mortgage

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Documents Needed for a Self-Employed Mortgage

If you’re a Self-Employed home buyer searching for a mortgage, especially for the first time, it can feel like you’re stepping into the unknown. One thing on your mind will be what paperwork you’ll need to gather and how much time it will take.

Here are our top tips for the documents you’ll need to apply for a Self-Employed mortgage, and more.

That way you’ll receive the best up to date advice and guidance available, plus they’ll handle everything for you. It’s quick and easy to arrange an initial chat with a local Mortgage Adviser who will put your mind at rest straight away.

What is a Self-Employed Mortgage?

In reality there is no difference in the type of mortgage product available to you as a Self-Employed mortgage applicant. However, being Self-Employed means you’re paid differently to your employed counterparts.

So when it comes to applying for a mortgage, you will need to prove your income based on your Self-Assessment tax returns or your limited company accounts. You will also need to show your business is viable in the long term.

In today’s current Covid-19 climate, lenders are cautious about lending to both employed workers and Self-Employed mortgage applicants. Therefore, Mortgage Lenders will expect you to have been trading for at least three years so prepare proof of your income and business stability in advance.

A good Mortgage Broker will be on your side. They’ll help you to compile everything you need and submit your application for you.

What specific documents will I need to get ready?

The documents you’ll need to prepare depend on how you run your business. Speak to your accountant in the first instance to let them know you are applying for a mortgage so they can guide you.

Here’s an overview of the documents you’ll need if you operate as a Sole Trader, Partnership or Limited Company Director.

Sole Trader and Partnerships

Being registered as a Sole Trader or Partnership with HMRC, you will have copies of your latest sets of Self-Assessment accounts, not older than 18 months. At best you’ll have three years’ of accounts, however, most lenders will accept two years.
You’ll need your HMRC Tax Calculations and Tax Year Overview from HMRC forms which show how much tax you paid in each tax year.  If you haven’t got copies of these, your accountant will send them to you.

As well as income, you’ll need to show how much you spend and prove you have good debt repayment habits.

  • Self-Assessment Sole Trader or Partnership accounts
  • Tax Calculations and Tax Year Overview from HMRC
  • Bank statements – business and personal for the past three complete months
  • Utility and Council Tax bills showing your name and address
  • ID documents – electronic copies of your passport and driver’s licence
  • Credit report
  • Proof of deposit savings

Documents for Limited Company Directors

As a Limited Company Director here are the documents you’ll need.  If you have other mortgages, such as Buy to Let, you will need to provide Self-Assessment accounts as well.

Lenders will want to see how much you pay yourself.  However, some lenders will include retained profits in their calculations.

  • Finalised Limited Company Accounts for the last two or three years
  • Self-Assessment accounts and Tax Calculations and Tax Year Overview from HMRC forms – if these apply to you
  • Director salary payslips
  • Dividend drawdown vouchers
  • Business and Personal Bank statements for the last three months
  • Electronic copies of your passport and driver’s licence
  • Current Credit report
  • Evidence of deposit readily available

How do you improve your chances of being accepted by a lender?

Lenders like to feel confident they are lending to people who will keep up regular payments on their mortgages. Here are our top three tips on how to boost your chances of receiving a favourable mortgage offer.

  • Set your sights on reaching a deposit band of 15%, 20% or 25%
  • Check, and if you need to, change your Electoral Register details to prove your ID
  • Clean up your credit report by paying off any debt and boost your credit score

How can The Mortgage Company Help me apply for a mortgage?

As a well-established group of Mortgage Advisers, we will take care of you and your mortgage at every stage of the process. Our service includes finding the right specialist lender, helping you compile the documents you need and completing and submitting the application form for you.

We’ll also deal with the lender on your behalf, saving you valuable time and money.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE