Joint Mortgage One Self-Employed
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Can you get a joint mortgage if one applicant is Self-Employed?
When applying jointly for a mortgage, it doesn’t matter whether both applicants have the same type of employment or not. The Mortgage Lenders are concerned with whether or not they will be able to jointly afford the monthly repayment on the mortgage for the duration of the mortgage term; whether that income is earned through a traditional PAYE work or Self-Employed business, is of little concern.
If you and your partner do happen to have different income types, the Mortgage Lender may have a slightly more complex calculation ahead of them, when determining your loan, however, from your perspective, it’s just a standard mortgage application. The only difference that will be apparent, is in your proof of income, which will be based on your individual employment type.
How much can you borrow if one applicant is Self-Employed?
With any residential mortgage, the amount that you can borrow will be based on your affordability, as determined by the lender. In this case, your joint affordability will be taken into account, which for the majority of joint applications, leads to a higher loan. The only circumstances where this may not apply would be if one partner has a particularly poor credit history.
Typically, an offer of between three and five times the borrower’s income is offered for a residential mortgage, joint mortgages, will be multiplied using this scale based on the applicant’s combined incomes; taking into account other outgoings, the stability of your income and your credit score.
What documents do you need if one applicant is Self-Employed?
For PAYE applicants, three months worth of payslips and bank statements are usually adequate proof of income, however; Self-Employed applicants will prove their income depending on their specific trading type.
It’s also common for Self-Employed applicants to have to provide two to three year’s worth of proof of income, to mitigate the risk of income fluctuations, although there are lenders willing to accept a minimum of one year of accounting history.
Those who trade independently usually have a fairly straightforward income stream, so your personal annual will form the basis of the loan calculation. Each lender will have their own criteria in terms of the length of your working history you will need to evidence, but they will be likely to request the following to cover that duration:
- Certified accounts
- Tax calculations
- HMRC tax overviews
There tends to be three major payment methods for contract workers, and not all lenders accept all of them, so it’s important to seek advice from a broker like ourselves, before you begin to approach lenders.
- Day-rate contractors – there are lenders who will work with an annualised version of this, you will usually need to provide evidence of the rate and at least a twelve month contract guarantee
- If you operate like a freelance worker, you will be assessed much like a Sole Trader, see above
- Umbrella company employees – are usually treated like employees, so your payslips from the umbrella company will form the basis of your proof of income
Those who are the Limited Company Director will be assessed for affordability based on their income from personal salary and dividends, although some lenders will also take your net profits into account. If you own shares of at least 25% of a business, your share of the total net income will be used.
Proof of income usually required from business owners are:
- Certified business accounts
- Business tax calculations and overviews from HMRC
- Business bank statements
Does a mortgage have to be in joint names?
It is possible to buy a property having the mortgage in just one name and have the deeds include two or more owners, without the additional homeowners contributing to the application process.
How can a Mortgage Broker help if one applicant is Self-Employed?
Whether you’re looking to apply for a mortgage jointly or independently, our Mortgage Brokers, here at The Mortgage Company, can offer specialist advice to Self-Employed applicants. Having access to such a broad range of lenders means that we are not only able to find mortgages to suit your individual income type, but can find the most competitive interest rates available for your circumstances.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE