There are so many benefits to being self-employed. But though you’ll likely be enjoying greater flexibility over your working hours and the chance to earn on your own terms, you may run into some difficulty if you want to secure a new mortgage deal on your next home.
Even if you’ve navigated the mortgage market before, it’s always worth asking our experienced brokers for advice on where to look and whether or not you’re likely to meet certain lenders’ criteria. Read on for a breakdown of the things you’ll need to consider when preparing for your move and how your self-employment status may affect your choice of mortgage providers.
Things to consider when moving between properties
A home mover is someone who already has a mortgaged or owned home and is moving into a new property. As a home mover, you can choose to ‘port’ your current mortgage with your existing lender or apply for a new mortgage with a different provider. Your mortgage broker will be able to advise you on the best option based on your repayment history and the terms of your current agreement.
As a home mover, you are likely to have some general knowledge when it comes to finding the right mortgage and dealing with brokers. Whilst costs are important to you, you’re focusing on other factors for your move, such as achieving new lifestyle goals, upsizing to meet the demands of your growing family; or changing location due to work or family commitments.
You’re in a much stronger position than a first-time buyer because you have evidence of your ability to pay your mortgage repayments in full and on time every month. This will put you in a favourable position when it comes to getting a good interest rate on any new mortgage deal. You’re also likely to have built up some equity in your existing property, meaning you’ll be entering into a new agreement with a better loan-to-value (LTV) than before.
One of the most common problems that home movers experience is being stuck in a chain. This is the term used for a sequence of linked home purchases who are reliant on each other for the preceding and succeeding purchases; for example, those buying your house are reliant on you completing on your new home in order to move into your old one.
It’s important to stay in contact with your solicitor throughout the moving process to ensure everyone is kept up to date with potential move dates and any delays are communicated up and down the chain.
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.
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 customers who want to move home. 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 more willing to offer you competitive rates and terms.
Other items that could help with your application include the valuation or purchase price, the mortgage term, your credit report, how much of your own money you could add to the deposit, and a few personal details that paint a full picture of your financial commitments. Our specialist lenders dive deeper into the figures that the traditional lenders don't consider as additional considerations and an incomplete view of your financial circumstances.
Why use a mortgage broker?
Save yourself time, hassle, and the prospect of damaging your credit file by arranging multiple checks with unsuitable providers. Talk to the team at CLS Money today to explore your options and get free, no-obligation quotes on the deals that best suit your circumstances.
We’ve helped countless self-employed individuals track down suitable rates and terms from providers who specialise in supporting home movers who work for themselves. We can access the whole of the market, which means we’re not limited by preferred providers – and, of course, all of our work is authorised and regulated by the Financial Conduct Authority (FCA), so you have additional peace of mind that we’ll be providing you with accurate and up to date advice.
CLS Money – specialist mortgage brokers for every eventuality
The team of specialist mortgage advisers here at CLS are used to working with every type of borrower. They understand the differences between what a qualifying mortgage looks like from each provider, so when it comes to landing a new deal for a self-employed or any other type of worker, they've got their finger on the pulse.
If you're looking for mortgage deals in any corner of the market, why not see what a CLS mortgage adviser can do for you?
Moving your existing mortgage
Extending how much you could borrow
New mortgage deals
Lowering your interest rates
Changing your monthly payments
Alternatives to your current mortgage deal
BTL mortgage options
Repayment mortgage options
Mortgages for those with a poor credit rating
Negative equity mortgages
Interest-only mortgage options
New property mortgages
Make a mortgage appointment to discuss whether moving to a new lender is right for you. All we need are a few personal details to get the ball rolling – you could be moving home far sooner than you think!