More and more people are choosing to freelance.
“The number of self-employed workers has increased from 3.3 million in 2001 to 4.8 million in 2017, according to the Office for National Statistics.” (source: https://www.bbc.co.uk/news/business-44887623)
Although getting a mortgage can be challenging for the self-employed, it is not impossible.
Prior to the financial crises in 2007, if you were self-employed you could apply for a self-certification mortgage; however, partly due to abuse of the system, these loans were banned in the UK in 2011.
For the most part, lenders do not offer bespoke ‘freelancer mortgages’. What they are offering is just the same as any other normal mortgage – you may simply have to provide more evidence to prove your income than if you were on a company’s payroll.
Fortunately, mortgage lenders are generally recognising the rise in the freelance sector and have adjusted their borrowing criteria accordingly.
Whether you are a sole trader, a director or a partner in a limited company, as a general rule you will need to have two to three years’ worth of tax calculations (SA302 forms from the HMRC) or trading history in order to have a successful application.
Tips for freelancers looking to get a mortgage
Make sure you have all your accounts and contracts up to date. Lenders will want to know your past income as well as forthcoming contracts if you are a contractor.
If you are a company director, you will need to provide evidence of your salary as well as your share of dividends, they may also take into account any net profits.
Depending on your loan amount, you may only need a 5% deposit for houses in Weston-super-Mare. This is subject to your credit score and the length of time you have been trading.
Naturally, the larger your deposit, the better mortgage rates that will be available to you.
Every situation is different, every business has its own set of individual requirements and every lender will have its own set of products.
As a freelancer, it may be useful to look for mortgage products that provide the option for additional payments. Your cash flow may fluctuate drastically depending on when your invoices get paid. If this is the case, a mortgage product that is fully flexible and allows you to overpay might be worth looking at.
If you are a freelancer and looking at houses in Weston-super-Mare, speak to estate agents Weston-super-Mare based or our in-house mortgage adviser. Visit our website (https://www.housefox.co.uk/meet-the-house-fox-team/) for further information.