If you’re self-employed, lenders like to see as much evidence as possible that you’d be able to comfortably afford your monthly mortgage repayments.<\/p>
It’s common for lenders to ask for at least three years’ worth of accounts before even considering your application. However, there are a few that may offer mortgages to those with just one year’s worth of accounts. There may even be some that will look at your application if you’ve been in business for only 9-10 months.<\/p>
Your choice of lenders will be smaller in this situation, and you may only be offered inferior rates.<\/p>
Nevertheless, you can still get a foot on the property ladder.<\/p>
Lenders need to be sure their applicants are able to afford the repayments on any loans offered.Because self-employed applicants don’t have guaranteed income, it’s harder for lenders to achieve this level of certainty.<\/p>
If an applicant can show consistent levels of income over three years or more, this provides a lot more evidence of what their future income is likely to be.<\/p>
In the eyes of a lender, one year’s worth of accounts isn’t enough evidence to prove that an applicant will be able to afford their repayments over the length of a mortgage term. Perhaps they had a fortunate year, during a favourable market.<\/p><\/div><\/div><\/div>
In the past, it was impossible for self-employed applicants to be approved for a mortgage without at least one year’s worth of accounts. This is because lenders needed to provide physical evidence they’d lent responsibly.<\/p>
However, it may now be possible that some lenders will consider applications from those who have been self-employed for around nine months or more.<\/p>
These applicants could potentially be offered a “mortgage in principle”, for a deal after they submit their first year’s worth of accounts.<\/p>
Most mortgages in principle last 90 days, so the applicant could begin their property hunt, ready for their mortgage to be confirmed after their first year of self-employment.<\/p>
The best way to find a suitable lender is to work with a professional mortgage adviser. These individuals have enough specialist knowledge to recommend the lenders most likely to work with applicants in your situation.<\/p><\/div><\/div><\/div>
Your accounts will need to include the same figures as those submitted to HMRC.You could provide your SA302 forms, which are issued by HMRC after you submit a paper tax return.<\/p>
Alternatively, you could send through any forms that were certified and submitted to HMRC by a qualified accountant.<\/p>
You’ll also need to provide proof of identity, proof of address, recent bank statements and other documents required of all mortgage applicants.<\/p><\/div><\/div><\/div><\/div>
Just because you find a lender that will consider applicants with one year of accounts, it doesn’t mean they’ll approve you.<\/p>
In many cases, you’ll need to show more proof you’re a reliable borrower than an individual with three years of accounts.<\/p>
Here are some tips to boost your odds of being approved for a mortgage with one year’s worth of accounts.<\/p>