The COVID-19 pandemic has hit most, if not all, businesses hard, particularly the self-employed.

We’ve put together these top tips to help you with your mortgage as a self-employed person or sole business owner:

1. Lenders can view your income in a few different ways, so speaking with a broker about how income can be assessed is vital.
2. Some lenders may look back over the last three years, so have three years’ accounts and self-assessment tax calculations at the ready.
3. As we are nearing April (the end of the tax year), it’s worth speaking with your accountant now in order to be able to submit accounts or your self-assessment tax return as soon as possible.
4. At present, lenders have varying income multiples and loan-to-value caps for self-employed applicants. Some are more conservative than others, so if your bank cannot lend, speak with a broker, as another bank may be happy to lend. 
5. Check your credit file.  A good credit score is vital and simple adjustments such as updating all accounts to your current address and making sure you are on the electoral roll may improve your score with little effort.
6. All lenders will ask about how COVID-19 has affected your business.  Have a think about this and discuss it with your broker.  If you have taken any Government assistance, let your broker know as soon as possible, as this will have an effect on your ability to borrow – it’s best to get this covered off at the start of the process. 
7. If you are a contractor, we can use your contract income rather than your net profits to calculate affordability.
8. If you are a professional, we can look at income multiples of up to 5.5 times income. 
9. As a rule of thumb, lenders work on the basis that the more you earn, the higher an income multiple you can borrow.
10. If you work in a role where, theoretically, you can work to age 75, there are high street lenders who can take the mortgage term to this age.  This can help to maximise the amount you can borrow as they can apply a more generous calculation to your income.

Fox Davidson

Fox Davidson is an award-winning team of property finance consultants. To discuss your property funding requirements, please email [email protected] or call us on 0117 989 7950.