Self Employed Mortgages without Proof of Income
Self-cert mortgages no longer exist in their traditional form so getting finance for self employed customers can be tough. However, if you are looking to borrow additional money from your home then certain lenders do offer a secured loan without proof of income in many cases.
The FCA has imposed regulation to put the responsibility of lending on the organisation rather than the individual.
Therefore, lender's have an obligation to ‘lend responsibly', requiring them to ensure that the borrower is in a position now and in the future to meet your mortgage and other household commitments.
To do this they have to show they verified the income and the entire application sufficiently. The historical self cert mortgages sidestepped this entirely, which is one of the main reasons they no longer exist for loans regulated by the FCA.
So, how do I prove my income now?
If you need a mortgage self employed, the main way a lender will verify your income is through:
- Employer References
- Benefit / Pension Statements
- SA302 Tax Returns
- Self-Employed Accounts
Most of the main lenders you'll know about will require up to 3 years accounts and sometimes more.
BUT if you've only been trading a year, don't worry. There are mortgage lenders that will lend to you with 1 year in the right circumstances.
I have a complex situation, what can I do?
Mortgages for self employed people are often more complex than for employed applicants, and careful advice is required.
Create may be able to get in touch with underwriters/business development managers (decision makers) who look at things on a case by case basis.
Lenders can then consider accountants references, those paid in cash, and a range of other income evidence that may differ from what your main high street bank would ask.
Tell us about your situation and see how our advisers can help.
So what income can I use?
The income lenders usually accept is:
- EMPLOYED – gross basic income – bonus – overtime – commission – car / town / shift allowances – mortgage subsidy – other cash employer benefits.
- SOLE TRADER – Net profit (if using accounts) – Total income received (if using SA302's).
- PARTNERSHIP – Your share of net profit (if using accounts) – Your share of total income received (if using SA302's).
- LTD COMPANY – Your share of directors salary – Your share of dividends – Occasionally lenders can consider net profit if there has been a large business expense or a sum earned but left in the business and not withdrawn.
Most lenders will require at least 3 years accounts; however here are some lenders that accept 2 or even 1 year's accounts.
The important thing to note here is that if you're having trouble finding a lender to accept your unique situation don't give up.
Give us a call, leave a message on the live chat, or make an enquiry and see how one of the self-employed specialists we work with can help.
Ways to prove income
Standard evidence: – SA302 self assessment tax returns – Finalised accounts – Projected accounts More flexible lenders can use qualified accountants references to show: – Pay slips from your own company/family company – Handwritten pay slips – If paid in cash.
Also, occasionally lenders can accept proof of rental income using the tenancy agreement and bank statements.
Other incomes lenders may accept
Investment income Rental income Trust income Income earned overseas Income earned in a foreign currency Bursary Stipend Pension State benefits and more.
Think carefully before securing debt against your home, your home
may be repossessed if you do not keep up repayments on your mortgage.
Create Finance Limited. Company Reg: 09582938. Registered Office: 35 Friar Gate Studios, Ford Street, Derby, Derbyshire, DE1 1EE.
Create Finance Limited is registered with the Data Protection Act 1998 registration No. ZA129368 and is authorised and regulated by the Financial Conduct Authority under Firm Reference Number 708799 an Appointed Representative of TMG Direct Limited which is authorised and regulated by the Financial Conduct Authority under Firm Reference Number 786245 and registered with the Data Protection Act 1998 Registration No: ZA178200.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. The guidance and/or advice contained within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK. The overall cost for comparison is 4.8% APR. The actual rate available will depend upon your circumstances. Ask for a personalised illustration.