The big problem with being self employed and wanting a mortgage….
Author: Russell SmithJuly 19, 2015
Pre 2008, getting a mortgage was one of the easiest things in the world.
Since the financial crash of 2008, it has been increasingly difficult for anybody to get a mortgage but if you are self-employed, a freelancer or a contractor it can be even harder.
If you are employed, you can pretty much produce 3 months payslips and most mortgage providers will give you a mortgage providing you earn enough.
The trouble with being self-employed, freelance or a contractor is that you are viewed as a higher risk since (in their eyes) you don’t have a ‘real job’ or you don’t have steady employment.
You can produce your tax return or your accounts but they will often need an accountant to verify the numbers and in some cases, predict the future profitability of your self-employment.
There is also something very important for you to know…..
Good accountants will always be trying to save you tax. They will do this by reducing your profits by making sure you have all the legitimate costs in the business. The trouble is that this may go against your desire to get the property of your dreams since you may need your income to be higher.
Also, mortgage companies will often look at your personal tax return and not your limited company accounts. Which means it becomes less about what you actually earn (how much profit you have made in the year) and more about what you have taken out of the company. So you sort of get penalised for leaving money in your company.
There’s two ways around these problems….
Firstly, tell your accountant when you are just beginning to think about moving and secondly, get a decent mortgage broker who can communicate the mortgage provider and will be able to bring in the limited company accounts numbers as well as the tax return.