Joint Mortgage Self-Employed
Daniel Shaw and James Blackhurst explain how to get a joint mortgage if you are self-employed.
How does being self-employed affect your eligibility for a joint mortgage?
It doesn’t, really. You will be assessed in exactly the same way as if you’re employed – but the main difference is the documentation that you’ve got to provide for a self-employed applicant. Apart from that it’s assessed in the same way.
What documentation is typically required for self-employed individuals applying for a joint mortgage?
It depends what type of self employment you have. You could be a sole trader, a director of a limited company or have a percentage of company shares, so it all depends on the type of self employment.
Generally you will need the last two years’ tax calculations and tax overviews plus certified accounts. Lenders might also ask for an accountant’s reference. You’ll also need business bank statements and possibly business plans. There could be a few different things that they ask for depending on your situation.
Are there any specific requirements or restrictions for self-employed applicants considering a joint mortgage?
No, they’re fairly similar requirements for all applicants. Self-employed applicants can often be a bit apprehensive about whether they’ll get approved for a mortgage. But in all honesty, as long as you’ve got all the up-to-date documentation, you shouldn’t really have any issues.
How can self-employed individuals improve their chances of being approved for a joint mortgage?
Being up to date with things really helps. Tax calculations are obviously done annually, but they can lag half a year or nine months behind.
If you know you’ll be going for mortgages in the next year or two, make sure that everything’s up to date with your accounts and your self-assessments. Get everything to hand so that when you go to a lender or your broker, it’s all ready.
Can self-employed applicants include their spouse or partner in a joint mortgage application?
Absolutely, yes, they won’t be treated any differently in that scenario.
Are there any additional considerations for self-employed individuals when applying for a joint mortgage, compared to employed individuals?
It’s all about how you prove your income. If you were working for a family firm, sometimes lenders will delve a bit deeper into your role and how long you’ve been there, but as long as you can prove your income and that it’s been sustained over a period of time, there shouldn’t be any issues.
If your income has gone down, lenders will obviously reduce the total they actually use for you – and similarly, if your income went up dramatically in a year, lenders would ask questions about that. So there are some considerations, but that’s down to your broker to sort that out for you.
Speak To An Expert
Our highly experienced Advisers are ready to help you with either buying or remortgaging a home, protecting your property and lifestyle along with saving you time and effort, ensuring you have a competitive deal right for you.
What are the advantages and disadvantages of applying for a joint mortgage as a self-employed individual?
If there are two applicants, we can use both their incomes, which means you can qualify for a larger mortgage. So if you’re looking to buy a bigger property and need a bigger mortgage, it helps in that situation.
You might also be able to put your money together to get a bigger deposit. You can also jointly pay for other costs as well, such as solicitors fees, valuation fees and mortgage products fees. There are lots of costs associated with buying a home, so if you can share that responsibility with someone else, it’s really helpful.
While shared responsibility can be an advantage, it might sometimes also be a disadvantage. If the person you’re buying with has some credit issues, and has previously defaulted on some payments, for example, that could impact your eligibility. It could also put your home at risk if they get back into financial difficulty.
Factoring in both people’s income means you’ve also got to include both people’s debts – so if one of you has high debt levels, that will impact your mortgage application.
How can self-employed individuals navigate potential challenges or obstacles when applying for a joint mortgage?
Speak to a professional broker. We know how to get the most out of whatever income you have as a self-employed person.
Lenders all have different criteria. You could be a limited company director taking a small dividend and a small salary, but the company could have large profits sitting in the bank. With some lenders you can use those profits as income.
Most people wouldn’t know about these things, but a professional will be able to put you on the right path to get the best model of borrowing for you in your circumstances.
What factors do lenders take into account when assessing the affordability of a joint mortgage for self-employed applicants?
It’s all about that combined income – using both applicants’ income from all sources. The joint applicant might have employed income, they might also receive some benefit income – it can all be used towards a mortgage, subject to the lender’s criteria.
It will also help if you’re both credit worthy – having a good credit score will improve your chances of getting the mortgage approved. If you can lower the amount of debt that you’ve got going out each month that will also make it easier to be approved for a mortgage.
Are there any specific types of joint mortgage products designed for self-employed individuals?
No, not really. The criteria behind each lender can vary, but there’s no specific self-employed mortgage.
Can self-employed applicants benefit from any government schemes or initiatives when applying for a joint mortgage?
There aren’t any specific schemes for self-employed applicants – there might be some current government schemes they can take advantage of, just like anyone else. But there’s no specific, self-employed government scheme out there.
What do self-employed individuals need to know about the income assessment process for a joint mortgage application?
There are lots of different criteria in terms of income for self-employed people, depending on whether they are sole traders, company directors, etc.
The key element is how much you’re getting paid – and therefore how much you can borrow. Once we know that for a client, we can point them in the right direction. Lenders will have different criteria for different classes of self-employment.
How does the length of self-employment history impact the likelihood of being approved for a joint mortgage?
With most lenders, typically you need around a two-year history. That just means you can demonstrate a track record by providing the documentation we’ve spoken about before.
In some cases, lenders will accept one year’s history. So if you’ve only been trading for 12 months, that doesn’t necessarily mean that you can’t be accepted for a mortgage. You just need to speak to a professional and explore all your options.
Are there any self-employment-friendly lenders or mortgage brokers that you recommend for joint mortgage applications?
Come and talk to us. We’re all self-employed, so we know how it works. We’ll sit down with you and get all the details so we can go to the right lender for you.
As I say, there’s loads of different criteria for each type of self-employed client. We’re here to act on what you want by giving the lender the information that they need to approve the mortgage. We know how to place these mortgages, so just give us a call.
Can self-employed applicants include income from multiple sources in a joint mortgage application?
Yes, absolutely. A lot of sources of income are acceptable to lenders. The more income, the more you’re likely to be able to borrow. We’ll help you get a mortgage approved.
Your home may be repossessed if you do not keep up with your mortgage repayments.