Self-employed - mortgages

shifty_uk

shifty_uk

shifty_uk

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Just looking for some opinions or past experience from fellow directors/self-employed folks on mortgages, what to prepare for and any difficulties encountered.

I'm not currently looking to purchase as I moved into my current property circa 4 months ago(employed at the time) prior to being appointed director of a limited company.

Before taking on the role, my plan was to downsize our outgoings and start my own thing this year regardless so got a great deal on a house that we seen as a bit of a project - Now that the work on the house has been complete, I'm sat regretting it, thinking I should've pushed the boat out further whilst I was fully employed and went for a bigger place, in a nicer area that we were happier with as there was plenty of room for it and my earnings are more than anticipated...Played it too safe.

It seems lenders prefer 2-3 years worth of accounts.. 2 years I think I can manage but 3 is a push...It also seems that smaller lenders are best in these cases and not necessarily the high street? I've always liked having my mortgage and the flexibility through HBOS.

Past experiences, any difficulties? Anything I should prepare for well in advance? With the exception of generally keeping accounts in check, of course.
 
I'm self employed and just about to complete. Found it very easy to get a mortgage. Easier than in 2006 when I got a self certified mortgage. A lot of mortgages you only need a year and you only need to print off your self assessments from Inland Revenue.

They don't need to see your accounts or books and you don't need an accountant anymore either.
 
One said:
I would speak with a mortgage broker.
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shifty_uk said:
I'm not at that stage, I'm just looking for general opinions, any difficulties faced, any potential advice for future reference... Some may have had issues, some may have found it a breeze.
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It sounds like there is little more anyone will be able to say at this point then....

You already know you will need 2 years accounts, in addition to SA302's for the two years as well. Aside from keeping your finances in general in good shape - keeping debts low and ensuring your accountant is aware you will be looking for mortgage funding thus ensuring they aren't "over creative" with your books there isn't much else to say until you are at the point you need to get an agreement in principle. Once you have your two years worth of proof of income you will be able to find out what you can borrow and take it from there.

*edit* also worth noting the two years accounts / SA302's - Lenders have a time limit on the age of the oldest set, so after a certain time after the end of the tax year your accounts may not be accepted (depending on your trading year as well) so best for your accounts to be done timely and your tax returns to be done ASAP after end of the year rather than waiting for deadline day...

Usel said:
I'm self employed and just about to complete. Found it very easy to get a mortgage. Easier than in 2006 when I got a self certified mortgage. A lot of mortgages you only need a year and you only need to print off your self assessments from Inland Revenue.

They don't need to see your accounts or books and you don't need an accountant anymore either.
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This is very sweeping and should not be relied upon.
 
I appreciate the advice BDEE. You've just disagreed with Usel though which shows there's varying opinions on the matter. For instance, I've been told it's an absolute nightmare unless you have 3 years worth of accounts (said person was demanding a 700k mortgage, right enough) and others have said it's easier than the internet scare stories make out. Obviously depending on individual circumstances but opinions/experiences are welcome :)
 
Usel said:
I'm self employed and just about to complete. Found it very easy to get a mortgage. Easier than in 2006 when I got a self certified mortgage. A lot of mortgages you only need a year and you only need to print off your self assessments from Inland Revenue.

They don't need to see your accounts or books and you don't need an accountant anymore either.
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Really? Wow. That sounds a lot less than I thought they'd need - I was under the impression they'd need 2-3 years worth of income.

I'm self employed and have been since 2008 so I shall be watching this thread with interest.
 
If it helps, I work in mortgages and have done since 2002.

It varies between lenders on how many years proof of income they need. Even then, there is the potential that even if their policy states two years they could demand a third if they deem it a requirement. It depends on the application. £700k is a large amount - But still doable with 2 years proof of income.

Usel's statement, which whilst I am not saying is impossible (I have seen such circumstances agreed where the prior employment was related to the new self employment) there is a lot more to it than one size fits all and depends on how income is made up. What they are describing sounds like it would have been a sole trader rather than a director and this potentially makes a big difference depending on what the income is made up of - Sole traders just have a net profit / income received to take into account. Directors are a different scenario. Also true to say that in some circumstances accounts are not needed, just the SA302's, but generally again for directors this can often not be the case. Hence why their statement should be taken with a pinch of salt.
 
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I had a mortgage last year like this.

Its specialist, worked with one years books and a whole host of support from my accountant etc.

It was a pain in the back side, but worth it.

High street lenders need two / three years books with you as either the director or sole trader. If you move from sole trader to director they wont look at the previous accounts, this is the same for my mortgage (kensington via a broker (recommended )) IF you switch from sole trader to director you need to build up some history
 
Hikari Kisugi said:
ask hmrc for your sa302s this is what any company will want.
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Yep.

Oddly, you can now print your own SA302s via a direct link on your own online SA account through the Govt gateway.

But because they are in a different layout, even though with all the same information, the last clients mortgage broker I gave them to wouldn't accept them and I still had to request them from the HMRC :rolleyes:
 
I am going through a mortgage application at the moment as a contractor. The Mrs best friend is a senior broker for the biggest contractor mortgage brokers though which helps. (I can share the name of the company if you send me a message) so far it has not been too bad. The main things they judge the value on is your contract. So I have shared last year's and this year's plus my cv the bank uses this to judge if you can afford it. Then some account history to back it up. Overall not too bad. Just sending the last documents this morning to kick it off. :) however the bank we are going through mostly prefers IT contractors.
 
My wife is a sole trader. When we last took out a mortgage (2013), our mortgage lender required six months of bank statements and two years of signed off accounts. They initially said that they wanted an explanation for every purchase over £300 on the bank statements but dropped the requirement when we queried it.

We had fun times as the accountants that my wife was using at the time changed their name and didn't tell their professional body. This meant that when the mortgage lender checked that the accountants were accredited, their search came up blank. A short panic ensued.
 
Freakbro said:
Yep.

Oddly, you can now print your own SA302s via a direct link on your own online SA account through the Govt gateway.

But because they are in a different layout, even though with all the same information, the last clients mortgage broker I gave them to wouldn't accept them and I still had to request them from the HMRC :rolleyes:
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They should be accepting them. I think they have a different name but yes it is the same info. I think some brokers are twitchy about taking them in case the lender then doesn't take them....
 
When investigating a £650k mortgage we were told 3 years of accounts by 3 different major high street lenders (ok we probably wouldn't have chosen those but we were doing research).

Thank god we decided not to get it!
 
Aren't there specialist mortgage providers for self employed people/contractors which generally don't require as many years of accounts?
 
alx said:
Aren't there specialist mortgage providers for self employed people/contractors which generally don't require as many years of accounts?
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There are but as a couple of others in the thread have said, bit of a pain in the backside to go through. Everyone seems fairly content with their finally outcome, though..
 
i just got my first mortgage a little over a year ago. been self employed for 2 years up to that point. 1 mortgage lender wanted my books to be audited by an accountant, i didnt stump up for that as my books are very very simple. Next mortgage lender we went to just wanted the previous 2 tax years self assessment forms, didnt need to be audited by an accountant and away i went. My books are very simple and always done on the 6th of April. My mortgage deal is up at the end of june 2017 so i'll do my self assessment on the 6th of april 2017 and then go to my broker to get a new deal.
 
Self employed (sole trader), first time buyer here. We completed at the end of May.

We decided to use a broker and it was pretty straight forward. I've never had an accountant and the only extra documentation (aside from proof of deposit, 3 months bank statements, ID) which was requested were 3 years SA302s and Tax Overviews.

Being able to print your SA302s must be relatively new (couldn't do it last year!) as I sent our broker the online ones but he wasn't sure if our lender would accept them, so still had to request them direct from HMRC.

My personal finances are pretty straight forward. Salary goes into my main bank, then standing orders to 2 other banks for tax and house deposit (now mortgage). Only thing I was a little worried about was my flying lessons on my bank statement - ~£150+/hr and I was doing 4-5 lessons a week at the start of the year - but wasn't a problem or queried.
 
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