Self Employed Mortgage with One Years Accounts

When it comes to running your own self-employed business, you may be excited about the idea of finally earning the income you need to buy your own home. The snag, your limited time as a self-employed individual may trip you up – or so you’ve been told. What you may not realise is that there are lenders out there that will be happy to lend to those who are looking for a self-employed mortgage with only one years accounts.

Can You Get A Mortgage If You Have Only Been Self-Employed For One Year?

Yes! You may worry about being refused, but if you speak to the right lenders, you will be able to secure the mortgage that you want for your new house. It’s still true that obtaining a mortgage with less than two years of accounts can be difficult, but it all depends on where you look.

Many lenders want three years of accounts or more to prove your income. Still, some lenders consider self-employed individuals with under two years of accounts, and a select number of lenders will help those who are looking for a self-employed mortgage with one years accounts. As long as you have the accounts that will backup your income and are drawn up by a qualified accountant, lenders can often accept you for a mortgage before you’ve completed a full year.

How Does The Application Process Differ?

Self-employed mortgages are historically harder to obtain, given that lenders find it hard to establish the earnings of the individual. Self-employment is often fraught with contract changes and income changes, and lenders require stability. Those who have been self-employed for longer than three years are considered the same as those in full-time employment, and less than this and you are considered to be a financial risk.

The application process differs because of the amount of proof needed for income changes. You need to have your accounts and a forecast for your income ready to present. Borrowing has reduced with the lenders tightening their belts, and lenders are requesting proof in all applications. Financing for the self-employed has become more difficult, but it’s not impossible.

Do Borrowing And Fees Differ From Standard Mortgages?

Most self-employed applicants looking for a mortgage can borrow the same as employed applicants, but this is still dependent on credit scoring and income. Affordability has to be proven, too, and some lenders will accept consideration of an income projection if the accounting year is not yet complete. If you are heading toward completing your second year as a self-employed applicant, then a lender would accept the first year, plus the eight to nine months of the second year and an income projection.

Your accountant can calculate whether they expect your trading to continue and provide a projection for the lender. Lenders will tell you that it’s not always as straightforward as it could be and they would be right. However, with the extra paperwork, it can be completed, and you could be on your way to your new home – even with less than one year of accounts.

What Income Evidence Is Required?

Mortgage lenders look to see whether you can afford the mortgage you are applying for. They will look at the deposit and assets you have saved, your current contract income and your projected income. If you have evidence of projects lined up, this is going to help you in your pursuit for a mortgage, too.

Any mortgage lenders that will agree to a self-employed mortgage with one year accounts might ask for different forms of evidence. However, it’s a guarantee that you will be asked for proof of income via your accountant. Your accountant must be a qualified and certified individual to be accepted, and you may be asked for an SA302: self-assessment tax return, too.

When it comes to calculating your income, the figure used is the same, whether you have ten years of accounts or one year of accounts. If you are looking for a sole trader mortgage, or you are working in a partnership, the figure you provide is the one that confirms your share of the net profit when you are using the accounts. Mortgages for the directors of a limited company would need to provide the director’s salary and dividends received.

A self-employed mortgage with one year accounts is not as easy to obtain as others, but that doesn’t mean that it’s impossible.