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Joint Mortgage One Self-Employed
Can you get a joint mortgage if one applicant is Self-Employed?
The good news is, you can easily get a mortgage when one applicant is Self-Employed. In fact, from the applicant’s perspective, your experience is very similar to that of other applicants. Joint mortgages are assessed on your joint affordability and credit scores. The way in which you earn an income has very little impact on the application, other than with regards to proof of income required.
Whilst having two applicants with different income types on a mortgage application will require slightly more complex calculations from the lender’s point of view, it certainly won’t put you at any disadvantage in securing a mortgage. In fact, a Self-Employed applicant can benefit from applying with their more traditionally employed partner, as this enhances the overall stability of the application.
How much can you borrow if one applicant is Self-Employed?
Again, your employment type will not impact the amount that you can borrow, as long as you are both able to adequately prove a stable income. The Mortgage Lender will want to be satisfied that you can afford the repayments on your mortgage, but how you afford to do so is somewhat irrelevant.
When you apply for a mortgage product such as a Standard Residential Mortgage, you can typically borrow a multiple of three to five times your combined income. The multiple offered will vary depending on your credit score, affordability and the stability of your income.
What documents do you need if one applicant is Self-Employed
Mortgage Lenders ask for Self-Employed mortgage applicants to evidence a longer period of trading so that they can calculate an average yearly income over that duration. This helps them to mitigate the risk of fluctuations in income that are an innate aspect of self-employment.
It’s possible in some circumstances to find some lenders who will consider Self-Employed applicants with as little as one years’ accounts available, speak to us to find out more about this.
Whereas employed applicants generally all need to provide payslips and bank statements, the requirements for Self-Employed applicants differ, depending on the type of Self-Employed activities you participate in, as below:
Sole Traders or Freelance will need to prove their personal annual income, which is then averaged over a two to three year history. Proof required is:
- SA302 tax returns
- Certified accounts
For contractors it depends on the lender and how you are paid. Some lenders will look at your annualised day rate, if you have one, although others will use your income in a similar way to a Sole Trader, whether or not you have a day rate. Proof usually required is:
- SA302 forms
- Evidence of day rate – if applicable
- Ongoing contracts from clients
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As a Limited Company Director an average of your personal income will be used by most lenders, with some of the more specialist ones potentially also taking your net business profits into consideration.
If you are a part owner of a business, you must own at least 25% in order for the income derived to be considered in support of your mortgage application. An average of your share of the net profits will then be used in the lender’s calculation.
As business owners you will need to provide the following proof of income:
- Certified accounts for the period requested by your specific lender
- SA302 forms as above
- Business bank statements
- Business plans and future projected income are also sometimes required
Does a mortgage have to be in joint names?
It’s possible to buy a property with another person and have their name appear on the deeds without them appearing on the mortgage.
Unless there are definitive reasons not to include a partner on a joint mortgage application, however, this will almost always result in a higher mortgage loan offer, due the combined income.
How can a Mortgage Broker help if one applicant is Self-Employed?
At IMS we specialise in providing mortgage advice to Self-Employed applicants, whether you want to apply jointly with a partner, or not, and regardless of whether that partner shares the same income type as you.
We can help you to access those niche lenders offering competitive deals to applicants in very specific circumstances. We’ll ensure you’re prepared for your application, so both applicants are able to fully meet the lender criteria and have their documents in order. This will save time, money and the potential frustration of a failed application, should you choose the wrong lender.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE