It's your Mortgage Day!
A self-employed self-guide to securing yourself a mortgage
Let’s start things off with a nice little myth buster. Just because you are self-employed does not mean you can’t get a mortgage. It just means there are different criteria to be met and different documents needed. Here’s what we mean.
Depending on what kind of self-employed worker you are, you may or may not have an accountant. If you don’t, you probably should because they’ll be able to help provide you with all the audits, documents and advice you’ll need when applying for your mortgage. For instance, some banks may request a letter from your accountant to confirm that your business is not only profitable now but will continue to be so after you get your mortgage.
If you are self-employed you’ll need to prove a couple of things that PAYE applicants won’t. Again, an accountant could help you get your hands on the originals of the following:
Depending on the bank and your personal circumstance, some banks will request a minimum of two years of accounts or possibly even three years. In fact, if you had a bad trading year during one of them, you may want to submit additional years to confirm it was just a blip.
You will also need to include the two most recent years tax returns (P.21 or Notice Of Assessment or Chapter 4 Revenue Certificate with full completed Form 11) and your Tax Clearance Certificate.
As well as being able to show your personal bank account is in order, you will also be asked to show 6 months of statements for your business account. If you have a business credit card, you’ll need to show the same for that too.
By including copies of contracts and a summary of your business it allows you to show your mortgage advisor how busy you are. Say for example, if you have a wide range of clients that keep you constantly busy or even one or two that just give you regular work. In addition, if you have management accounts for your current year include them, this shows as regular an income as possible for your industry.
While applying for your mortgage as a self-employed applicant, you’ll need mortgage insurance to cover you against life’s unexpected events. Simply put, it’s designed to pay off your mortgage in the event of the death of you or your joint applicant before the end of the mortgage term. It might also be a good time to think about income protection insurances. You may have delayed doing so before but with any impending mortgage commitments, they really make sense at this point.
The articles contained in this First Time Buyers Guide are for reference purposes only and any views expressed in the articles are purely the personal views of the authors. You should not rely on any information relating to specific issues or make decisions without taking separate financial or other advice from appropriately qualified professional advisors.