No longer have PAYE payslips and need a mortgage? The days of a self cert are long gone, so what are the options? All lenders vary but in general you are going to need at least 2 years proof of income. This means either accounts, Inland Revenue SA302 or an Accountant’s Certificate. An advantage of being self-employed is that you can legitimately offset a greater number of business expenses against income to reduce the impact of Income Tax. However in doing so you will reduce your provable net income for lenders purposes, so beware. If you are planning on applying for a mortgage it may be worth seeking early advice to enable an informed decision to be made.
However there are other avenues to explore; you may have a partner’s income to take into account. Other income sources can often be used such as Tax Credits & some benefits, investment income or even pension income.
As with all mortgage applications, lenders will also be taking into account other criteria such as dependents, credit history, ongoing financial commitments and loan to value (i.e. the proportion of the value of the property you are seeking to borrow). And all lenders are different! Where you tick one box…so it isn’t just a case of researching for the most competitive product, but also satisfying lenders’ criteria.
With the introduction of the Mortgage Market Review on 26 April 2014, things are likely to get that bit more awkward, as lenders are set to impose more rigorous affordability checks. This will mean the new mortgage will be assessed for affordability on future higher interest rates, not just the great low rates available at present.
Always seek advice from a Whole of Market Adviser, who will be able to provide specific personal financial advice to your situation, and also be best placed to recommend the most suitable lender.
Independent Financial Adviser
DipFA CeMap F.Inst.L.Exec
M 07930 165670
T 01952 201897
F 0871 433 7455