First time buyer, self employed

How to get your first mortgage if you're self employed

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Helping first-time buyers get a self-employed mortgage

More flexibility. Greater control over your earnings. The chance to make all the big picture decisions for yourself. There are plenty of perks to being self-employed – but unfortunately, getting a mortgage quickly and easily is not often one of them.

You may find it even trickier to get a home loan if you’re buying your first ever property, given that lenders will consider you relatively high-risk to begin with.

Don’t worry, though. The team here at CLS Money have plenty of experience in sourcing and securing competitive mortgage deals for self-employed professionals who are new to the market.

Things to consider as a first-time buyer

Lenders define a first-time buyer as someone purchasing a property who has never owned a home previously.

If you’re a first-time buyer, you might not fully understand the mortgage process, so it can be really helpful to speak to an expert to talk you through it. He or she will explain all the key terminology and help you work out how much your monthly repayments will be, as well as how much the mortgage will cost you over the course of your full term.

One key thing to ensure from the start is that you have all the right documents to hand. Any errors, inconsistencies or omissions from your paperwork could be a red flag to your lender and could put you in a poor position when it comes to being accepted for a mortgage.

As a first time buyer, you might not have a strong credit history. Chances are you’ve never had to pay back this kind of debt before. From the lender’s perspective, taking you on as a mortgage customer is a bit of a gamble because they have no examples of your reliability as a debtor.

This is why it’s so important to use a mortgage broker when looking to apply for a first-time buyer mortgage. Their expertise will help you meet lender criteria, which in turn will give you a better chance of being accepted for a mortgage and securing your dream home.

How will being self-employed affect your chances of getting a mortgage?

You will be considered self-employed if you own more than 20 to 25% of a business from which you earn your main income. Self employed borrowers come in many guises – many are sole traders, often running a small business, others are freelancers working as part of team, then there are contractors and sub-contractors.

It's not solely your income your mortgage lenders are interested in, but the stability of your long-term earning potential. It could help to show how you've dealt with any self assessment tax returns, making payments where requested, as well as meeting payments within your business showing how well you manage money if you haven't had chance to achieve a good personal credit rating yet. Anything that shows a good track record, however many years of accounts you hold, can help. With our specialist lenders, each mortgage application is handled on a case-by-case basis, so being prepared and showing how efficiently you balance your regular outgoings is another positive you can present.

If you are a self-employed worker, securing a mortgage with some of the main high-street lenders can be a challenge. This is because you are seen as a riskier candidate; the company will perceive you as having a less reliable income and will be concerned about your ability to make your monthly repayments.

The good news is, there are plenty of specialist lenders in the market who are happy to lend to self-employed borrowers, but you’ll need to be prepared to provide a series of evidential documents to prove your income. When approaching a mortgage provider, you will usually need to have the following to hand:

  • Two or more years’ certified accounts
  • Evidence of upcoming contracts (if you’re a contractor)
  • Evidence of dividend payments or retained profits
  • Recent SA302 forms or your tax year overview from HMRC

If you’re self-employed and looking for a new mortgage, we highly recommend working with a specialist broker who will be able to identify and approach the lenders who will be more accepting of your circumstances, and therefore more willing to offer you competitive rates and terms. It always helps if you can show a good credit report and meet the lending criteria of your mortgage lender, with organised business accounts and bank statements

We work with the type of speciliast lender and mortgage providers happy to support those in self employment. For them, we help you to provide evidence of the future income they want to see. Your proof of income can come in many different forms, and you probably have more financial information available than you think. CLS are here to search through the mortgage products available to the self employed and small business owner, finding those that are a great fit for your situation.

Why use a mortgage broker

As a team, we’re perfectly equipped to guide self-employed individuals like you through the mortgage process. We have access to the whole of the market, which means we have access to deals from more specialist providers who are more open to lending to freelancers, contractors and company directors – even those who have never paid into a mortgage in the past.

What’s more, we make it incredibly easy for our customers to work with us. Choose CLS Money to take care of your mortgage needs, and you’ll get access to your very own CLS portal, where you can upload important documents and keep track of your application’s progress 24/7.

We help with a lot more than self-employed mortgages

We'd love to get you on the property ladder – however you earn your money and whatever your spending habits, but it isn't only our self-employed mortgage applicants we're here to help.

  • Lowering mortgage payments
  • Finding the best mortgage lender for your unique situation
  • Self certification mortgages
  • Mortgages for those with a poor credit report
  • Searching the mortgage market for specific case lenders
  • Tracking down affordable mortgage repayments for every situation

Contact us today for a free, no-obligation quote and honest advice on your next steps.

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Gemma May
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