Self-Employed Mortgage One Years’ Accounts
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Self-Employed Mortgage with One Years’ Accounts
If you’re looking to buy a house or remortgage as a self-employed person it helps to get your records in order. But how does it work if you have only been in business for a short time? The positive news is that some lenders will accept just one years’ accounts. We simplify the process of finding a lender and getting a competitive deal.
Can I get a mortgage if you have been Self-Employed for one year?
It is usually straightforward for the self-employed to get a mortgage, provided the business is profitable and you have a good credit rating. Lots of lenders welcome self-employed people as customers.
Even if your business has not been trading long, it is still possible to find a mortgage deal. It helps to have at least one years’ accounts but some specialist lenders will even accept people with just 9-10 months of records.
How much can I borrow?
A lender calculates how much you could borrow by assessing your income. They will often lend four to five times an applicant’s salary as the total loan. With self-employed borrowers the challenge is to calculate your annual earnings, as they may fluctuate; this is why mortgage lenders usually want to see two to three years’ worth of accounts, to give them a good overview of your income.
How do I prove my income with one years’ accounts?
If you only have a single years’ accounts a lender may ask to see a variety of documents to prove your income. The requirements can vary depending on whether you’re a sole trader, in a partnership or running a limited company, but generally include:
- Finalised accounts, certified by a qualified accountant
- Self Assessment tax forms (SA302)
- Personal bank statements
- Business bank statements
- A report from your accountant
A Mortgage Broker will be able to find you a lender that best suits your financial situation; helping you avoid any pitfalls and maximise your chance of gaining the highest value mortgage deal.
For example, some lenders will only look at the income you have taken out of your business, while others will look more broadly at the net profit in your latest year’s accounts.
What deposit will I need?
The minimum acceptable deposit is 5% of the property value but in addition, you often need a good credit score to get a 95% mortgage. If you can raise a larger deposit of 15% or more you’ll have a wider choice of lenders, be offered better interest rates and lower monthly payments.
A mortgage calculator can help you explore the difference a bigger deposit can make to mortgage repayments and evaluate a range of property prices.
It’s important to be confident that you can easily afford your payments, as your home is at risk if you fall behind. Consider too how you would manage if you were unable to work due to sickness or injury. Some business owners take out income protection policies to cover the amount of their monthly mortgage instalment if they can’t work due to illness or accident.
Can I get Help to Buy if I only have one years’ accounts?
The government’s Help to Buy Equity Loan scheme is open to First Time Buyers on new build properties. It’s a scheme that boosts your deposit to make buying a home more affordable. You contribute a 5% deposit, and borrow up to 20% from the government, this gives you a 25% deposit. You take out a mortgage for the remaining 75% of the house price. The government loan element is interest-free for five years.
The scheme is available to anyone, including the self-employed. If you only have a years’ accounts it may take some research to find a lender – so seek mortgage advice.
Other government schemes you could consider include Shared Ownership and, if you’re a council tenant, Right to Buy.
How can a Mortgage Broker help?
The Mortgage Co is here to simplify the mortgage process. As someone with just a years’ accounts, it may take a bit of research to find lenders that will accept you. By comparing numerous options we can recommend the right mortgage for your situation.
Once we’ve found a suitable deal we will support you with the mortgage application and make sure you have all the documents you need.
The Mortgage Co is a Ltd Company registered in England and is authorised and regulated by the Financial Conduct Authority. Contact our registered office today for an initial chat about how we can help.