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Busting the Myths on Mortgages for the Self-Employed

Many people assume those who are self-employed will struggle to get on the property ladder for various reasons, some even think it’s impossible, but this isn’t true.

While it can be more challenging when it comes to providing proof of your income and the process might take longer, it is the same as someone in an employed position.

The most common myths:

  • Getting a mortgage is harder if you are self-employed

The process of applying for a mortgage as someone who is self-employed is the same as someone who is employed. Those who are self-employed may need to evidence their finances differently but the process is more or less the same. Lenders will consider all applicants self-employed or not.

In addition, when applying for a mortgage, if you are self-employed or employed, you have access to the same range of mortgages.

  • Self-employed applicants need at least two years of accounts

While this is true and lenders might request at least two years of accounts, it is possible some will accept one year. While it might be more beneficial to have a longer period of time accounted for as a self-employed individual, it’s not always absolutely necessary.

  • Self-employed individuals can’t borrow as much money

Most lenders will offer the same amount of money to self-employed applicants as they would for those in an employed position. Typically the amount individuals can borrow is between 3 and 5 times your annual income, self-employed or not.

  • Self-employed individuals need a higher deposit

The general idea that self-employed individuals need at least a 10% deposit to be considered for a mortgage is another myth. Some lenders will consider offering 95% mortgages to buyers with a deposit of 5% whether they’re self-employed or employed.

However, when buying any property it is always favourable if you have a higher deposit as this can help applicants obtain a better rate.

So, if you are a self-employed individual who has been considering getting on the property ladder but have been put off previously by any of the above myths, you now know where you stand.

If you want to find out more, contact one of our Just Mortgages advisers to discuss your individual circumstances and consider all your options when it comes to getting on the property ladder.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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