Joint Mortgage – One Applicant Is Self Employed
When two people decide to apply for a mortgage together, there is a lot of paperwork involved in the process. A joint mortgage requires both names to be on the deed of a new mortgage, and both are responsible for the payments for the property.
Applying for a joint mortgage is often straightforward, as long as both applicants are employed and earning the necessary income to cover the mortgage as per the lender criteria. However, when you are looking to get a joint mortgage and one applicant is self-employed, it becomes a little more complex. Not impossible, just more complicated.
If you are self-employed and you are looking to apply for a mortgage, you may notice that the process is different for those who are employed full time. However, as long as you and your partner meet the criteria for a mortgage, you shouldn’t have a problem securing your mortgage, even if one of you is self-employed.
What Is a Joint Mortgage?
Joint mortgages have two people on one mortgage application, and both are responsible for meeting the payments. You share the equity and the profit if you decide to sell, and you are equal partners in the ownership of your home. When you apply for the mortgage, lenders look at both of your credit histories, job and income prospects to know that you can afford the payments.
The most significant benefit of a joint mortgage is the fact that you both have something to contribute, and as your income is shared, you will be seen as more desirable as the joint mortgage bumps your ability to make the repayments. You are also likely to be more eligible for a more expensive house, and this can help you if you are looking to buy a family home to start with.
Who Can Apply For A Joint Mortgage?
You don’t have to be married to apply for a joint mortgage as most people believe – or be in a relationship with a spouse to be able to get a property. That’s simply not true: you can buy a house with anyone, some lenders will even allow you to buy in groups, too, so you can buy with friends. A joint mortgage puts you all on an even footing, and you are all equally responsible for the payments as well as being equally receptive to the profit if you sell up.
What Do Lenders Look For?
When it comes to making mortgage decisions, lenders will look for the deposit you have, your ability to afford the repayments, your credit history and the credit history of any other applicants, your employment status, the type of property you are buying and more.
All of this will need to be provided to the lender on your application, and if there are further requests for the paperwork, they’ll make those, too.
Are Self-Employed Mortgages Different?
Lenders want to know everything about your income when you apply for a mortgage, and it’s no different for those who are self-employed. Lenders want to ensure that you have the evidence for income as they would a regular joint mortgage. You need to provide two to three years of accounts or more sometimes, though there are lenders who will accept self-employed applicants with one year of accounts or less.
Lenders will then calculate your affordability based on your salary, and they will also want to see if you have any future work contracts lined up. Evidence from your accountant about your income projection is also often asked for. Given that self-employed work is not always permanent, you have to consider that any gaps in your earnings will need to be explained.
How Much Can You Borrow Joint Mortgage – One Applicant is Self-Employed?
When you pass the affordability checks with your lender, you then need to consider how much you can borrow. This will all depend on the lender you have chosen, as some will cap your borrowing at four times the annual joint salary, where others will allow you to borrow up to five times the amount.
Sometimes, it’s easier to go through a single application instead of a joint one if the first applicant earns enough to do it on their own. This is often the case where one of you hasn’t been self-employed for a long enough time to prove established earnings.
How Much Deposit Do We Need?
The minimum deposit for a mortgage is 5%, but this is only currently available through the Help To Buy initiative. Typically lenders are looking for a minimum of 10% deposit with 15-20% being an ideal.