Myth 1: It is harder to get a mortgage if you are self-employed
Despite popular belief, self-employed mortgages are exactly the same as employed mortgages. The only difference for a self-employed mortgage applicant is in the proof of income you will need to supply. Certified annual accounts (this means they must be signed by a qualified accountant who is a member of a professional body) is one acceptable form of income proof. Another – and this is the preferred option – is a SA302 form, which you can request free-of-charge from the Inland Revenue. The form can usually be provided within 24 hours if you explain it is for mortgage purposes.
Myth 2: Your best route is self-certification
It probably used to be, but this popular loophole was closed in 2011. A few lenders do still offer fast track mortgages, which can benefit self-employed borrowers with large deposits and clean credit records. At the lenders’ discretion, your application may be ‘fast tracked’ without having to provide confirmation of your income. But my guess is the mortgage market review in April 2014 will probably see the end of the fast track mortgage.
Myth 3: You need at least three years’ books
Though it is true that lenders do prefer to see at least two years’ accounts, it is not impossible to get a mortgage with just one. You are going to find more flexibility from the smaller, lesser-known lenders, that you can access via a whole-of-market mortgage broker. And just because they are smaller, it doesn’t necessarily mean their rates are less favourable.
Myth 4: Lenders prefer low risk industries
Where residential and buy-to-let mortgages are concerned, lenders have no opinion on whether you are a slightly unhinged freelance lion tamer or a sensible management consultant type. If your books show you are turning a profit and have the ability to meet repayments, you will be considered as equals.
Myth 5: You can’t get a mortgage if you’ve previously been bankrupt
If a bankruptcy has been discharged for at least a year, you will be considered again for borrowing. However, you will need a larger deposit – up to 50 per cent – and have to prove you have been clear of any credit problems for at least two years.
Kevin Gibson is director at Ascot Mortgages.
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