This calculator is an estimation of how much you could borrow. If you’re ready to take out a mortgage, speak to a Revolution brokers to see what options are available.
Are you self-employed, and imagine that it will be more challenging to get a mortgage than if you were in traditional employment?
The business finance broker team is happy to report that this isn't always the case, and there are plenty of mortgage options out there for self-employed professionals.
It is correct to assume that mainstream lenders often prefer the simplicity of calculating the income of employed applicants. Still, by working with a specialist whole-of-market broker, you have every opportunity to secure attractive mortgage rates.
The key is to ensure you understand how lender eligibility assessments work, and put together an application to a mortgage provider whose self-employed products match well with your circumstances.
Revolution Finance works with competitive lenders, who cater to:
Our team is on hand to offer advice every step of the way and negotiate the best rates on the market. For more information and support, contact us on 0330 304 3040 or drop us a message at info@revolutionbrokers.co.uk.
Self-employed mortgages are pretty much the same as any other mortgage.
However, the calculations for your income differ, as a lender will need to consider your type of employment and an income that is very likely variable.
While many high street lenders will offer self-employed mortgages, this is usually not their primary product. We find that specialist mortgage providers can offer exceptionally competitive rates, mainly when self-employed mortgages are their core type of lending.
The difference is that a lender will assess your income on an alternative basis.
Unlike an employed applicant, your income might be less stable or might fluctuate considerably. Therefore, a lender will usually work on an average of your earnings over the last two or three years.
This calculation is different with every lender; some lenders are less flexible and might cap the maximum they can lend on a strict basis.
They'll also include different aspects of your pay - so the average annual income you make as a self-employed business might include different income streams. Some lenders will include 100% of all income, and others will be selective about which earnings they consider applicable for a mortgage income assessment.
However, working with a whole-of-market broker such as Revolution Finance ensures that you only apply to lenders who offer excellent mortgage rates.
Every lender works differently, but they will have similarities in the factors they consider:
Typically, lenders will be most comfortable seeing two or three years worth of accounts to demonstrate your trading history.
However, some of the lenders that Revolution Brokers work with can consider an application after only nine to twelve months of trading.
In that case, they will seek evidence about the security of the business and look at contracts and other factors to ensure the income is sustainable.
Unfortunately not - reputable mortgage lenders have strict criteria for demonstrating ethical lending. Therefore, they cannot offer to lend to a self-employed person who cannot prove how much they earn.
In most cases, you will need to show your lender accounts for at least the last nine to twelve months.
The longer you have been trading and the more trading history you can provide, the more lenders you have to choose between and the better rates you will get.
If you cannot provide sets of accounts, you might be able to apply for a second charge mortgage. This option only applies to applicants who have a mortgaged property and wish to take out a second mortgage to release the equity owned.
Contact the Revolution team if you struggle to demonstrate your income as a self-employed person and find it challenging to secure a mortgage.
You can, although with a bad credit history, it is less straightforward. However, by working with an experienced broker, you receive advice about which lenders are worth applying to, which cannot accept bad credit applications, and where you will be offered the best rates.
Revolution works with several bad credit specialist lenders, who have a more flexible approach to assessing self-employed applications.
Usually, the decision is based on other factors such as:
It can be possible, in some circumstances, to secure a self-employed mortgage even if you have had several adverse credit issues.
Provided some time has passed since more severe issues - such as bankruptcies and repossessions - and you can demonstrate good financial responsibility since a broker can negotiate a competitive deal on your behalf.
We also support clients with reducing their risk profile and mitigating issues presented by their credit history. For example, if you can increase your deposit value and produce at least three years worth of accounts, you have more options when it comes to self-employed bad credit mortgages.
It all depends on how long you have been trading for and how closely you fit the other lending criteria.
Usually, it would be best if you waited until you have been trading for at least nine to twelve months. In that case, you'll still have fewer lenders to choose between - if you have been trading for two to three years, you will often receive much better rates.
If you are newly self-employed but have a previous history of work in the same industry, this can help strengthen your application.
Most lenders will look at your average earnings and use this to calculate the maximum they can offer to lend.
Mainstream providers will usually ask for three years worth of accounts to calculate this average. Other more flexible lenders will look at the last two years, and fewer niche providers will look at the last nine to twelve months of trading.
Lenders can vary significantly in the calculations they use:
As an illustration: if you have been a freelancer for three years, with accounts for each, earning an average of £30,000 per annum:
The best way to maximise the amount you can borrow is to work with a whole-of-market broker with experience in the self-employed mortgage sector.
Revolution Brokers work with clients who have had a great year of trading, but the two previous years were less successful. This scenario can mean being offered a low mortgage maximum, even if you are now earning significantly more.
In this situation, our team would look to identify the right lender who is happy to consider one year's worth of trading in their calculations and help you find the mortgage of the value you need.
There are other factors to consider; some lenders vary in what income they determine as declarable. For example, some providers exclude bonuses and commission payments, whereas others will incorporate this income before calculating your average annual income.
Again, this all depends on the lender and how you manage your business. Declarable income that a lender will consider depends on your circumstances - for example, the calculation for a sole trader will be different than for a company director.
Here are indications of the type of income a lender will include for each self-employed kind of business:
Depending on the lender, you can sometimes include other sources of income to supplement your self-employed business earnings - these can include:
Typically, self-employed applicants will share with a lender:
Most commonly, these need to cover the last two to three years, but some mortgage providers will be able to lend with evidence of a year's trading, and sometimes less.
Specialist lenders can also accept other forms of proof, such as:
You might also be asked to provide other documents, including:
To make sure you get the best interest rates on the market, you can:
The easier it is to verify your income and process your application, the more likely it will be approved.
As an independent broker, the Revolution team will also help you prepare your personal finances before making an application - such as optimising your credit report and improving your credit score wherever possible.
Sometimes, we might advise waiting for an issue on your credit file to expire before applying, taking out responsible borrowing to build up a credit history, or identifying errors in your credit report to have these corrected.
By far, the best way to maximise your mortgage lending options is to work with a professional broker who understands all the essential factors in applying for a self-employed mortgage.
We work with lenders across the markets to negotiate outstanding deals and advise you throughout the process to give you the best chances of securing the lending you require.
Contact the Revolution team today on 0330 304 3040 or send a message to info@revolutionbrokers.co.uk, and we will get the ball rolling!
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The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature. We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.
Revolution Brokers understands that mortgages can be complex and confusing!
Ask us any question you might have, and one of our skilled consultants will come back to you as quickly as possible.
