Many borrowers won’t have any trouble providing proof of their income to get a mortgage, while others, such as freelancers or self-employed people, may struggle. Added to that, the days of being able to get a mortgage with no proof of income are gone in the UK thanks to a ban by the Financial Conduct Authority (FCA) in 2011.
Nowadays, mortgage lenders must make certain that borrowers will be able to pay back any large sums of money borrowed by getting evidence of their income rather than relying on word of mouth. The more evidence provided, the better the mortgage deal can be.
While a loophole has meant that these “self-cert” or “self-certification” mortgages are still available from some lenders in Europe, they do come with considerable risks.
If you’re self-employed, freelance, or receive your income from a range of sources, discover what your options are if you need a mortgage.
If you’re a freelancer or self-employed, you should have access to the same mortgage deals as others. The only difference is that you might find it a little trickier to gather enough evidence to prove you have a regular income and therefore persuade lenders that you’ll be able to make the mortgage repayments.
In order to consider a self-employed mortgage application, lenders in the UK typically ask for at least two years’ worth of accounts including details about your income, expenses and operating costs. You’re likely to get better deals by providing more evidence.
The lender will also review your average earnings from the last few years in order to assess whether you’ll be capable of making timely mortgage repayments. And if your financial situation is particularly complex, you might find that you’re referred to an underwriter.
It may actually help to contact a mortgage adviser if you’re self-employed as you could be matched up with lenders more likely to consider your application and offer you a deal.
While self-cert mortgages are banned in the UK, it may still be possible to get a self-cert mortgage from an overseas lender, but that doesn’t mean you should. In fact, the FCA issued an official warning about the risks of these self-cert mortgages.
The key considerations of getting a self-cert mortgage from an overseas lender are:
If you do decide to go ahead and apply for a self-cert mortgage from a lender outside of the UK, it’s recommended to double check what fees you’ll be charged, how the lender deals with missed repayments and what protections you’ll be offered if things go wrong. A UK mortgage adviser may be able to offer useful advice on this.
If you are struggling to get a mortgage via the traditional methods, you could speak to a specialist lender. They can provide the expertise on a particular area of lending where you’re looking for assistance.
Here are some steps you can take to try and improve your chances of getting a mortgage:
If you’ve managed to find a mortgage deal, a lender may well offer you a mortgage agreement in principle (AIP) before the purchase of a home is finalised. This is sometimes referred to as a “decision in principle” or a “mortgage promise”, but provides absolutely no guarantee.
You’ll need to submit an application for the mortgage when you’re ready to move, and the lender still has the right to amend the conditions and details of the offer. The lender can also choose to decline the mortgage deal previously offered, especially if, for example, your financial situation has changed.
An AIP is usually valid for up to 90 days, but if there’s a long delay between getting an AIP and applying for a mortgage interest rates could’ve changed, so you may decide to look elsewhere. Consider your timing carefully.
It’s also wise to think about the impact of applying for several mortgage AIPs as each mortgage lender will carry out credit checks, which could have an impact on your credit score.
Once you can prove your income, you should, in theory, be able to access mortgage deals that everyone else can. And the more evidence you can provide to a mortgage lender, the better your chances are at being approved and securing a better deal.
| Response | 55+ | 45-54 | 35-44 | 25-34 | 16-24 |
|---|---|---|---|---|---|
| Yes | 72.58% | 56.73% | 48.73% | 35.4% | 30.1% |
| No | 27.42% | 43.27% | 51.27% | 64.6% | 69.9% |
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