Mortgages for Company Directors and Self-Employed
Data recently released by the Office for National Statistics revealed the number of self-employed workers in the UK has surged to a new record high. There are now a massive 4.9 million workers across the nation who are their own boss.
Whether you’re a director of your own company, in a partnership or a sole trader, being self-employed can bring with it many benefits. You can work around your lifestyle, you’ll have greater flexibility and if you’re successful it can become a very lucrative venture. So, there’s no wonder why so many of us are becoming our own bosses.
But, what should you consider?
Lenders don’t have a separate category for self-employed mortgages. You have access to the same products and the same rates as your employed counterparts even if you’re your own boss. However, your earnings may be viewed as more complex to some lenders and you must be able to prove them to the lender.
When applying for a mortgage, you’ll be assessed on how much you are earning, how likely is it you will sustain that level of earnings, how you take your earnings, how long you’ve been trading for, your accounts history and a number of other things. Then, once all the relevant documents have been submitted, the lender will assess the application and make a judgement based on their own lending criteria – so you can appreciate how complex the application process can be on your own.
Different lenders have very different criteria when assessing self-employed income. The majority will look at the salary and dividends of a company director or the net profits of a sole trader. Some, however, will look at the profits of a limited company plus the salary drawn, which benefits those who retain profits in the business, rather than draw them all out as dividends. Another factor to consider is that the majority of lenders will work from an average of the last two years’ self-employed income, but a few will work from the latest year’s figures.
We specialise in arranging mortgages for the self-employed and company directors and we can provide invaluable advice to move the application forward as quickly and as smoothly as possible based on your current and future circumstances.