If your existing fixed-rate mortgage is coming to an end and you want to re-mortgage, it is still possible to do so even if your financial circumstances have changed. If you have gone from being a full-time employee to a self-employed professional, you can still find a mortgage lender, you’ll just need to evidence your income and be hot on the detail.
There are many reasons why you may be looking to re-mortgage as a self-employed individual. You might be keen to bring your monthly costs down if your equity in the property has risen over time. Alternatively, you might wish to borrow extra funds to pay for home improvements to enhance everyday life and add further value to your home.
Whether you are a creative freelancer, a tradesperson, or an artist, there are several steps to follow to enable prospective lenders to undertake their affordability checks with certainty.
Proving your annual income
First and foremost, you will need to be able to evidence that you have a steady income from your self-employment. Most mortgage lenders will require at least two or three years of self-employed accounts to verify this. You may choose to employ a chartered accountant to prepare your end-of-year accounts for your re-mortgage application. Alternatively, many lenders will also accept SA302 forms and Tax Year Overview forms, which are generated upon submission of your self-assessment tax returns.
If you normally use an accountant to minimise the amount of tax you pay on your annual income, you may wish to hold fire on this for the most recent tax year. Reducing your taxable income will also reduce how much some lenders will be willing to lend you.
Furthermore, if you receive an income through PAYE as well as self-employment. Be sure to document all of this and ensure your chosen lender is aware of all your income, not just your self-employed earnings.
If you don’t have multiple years of self-employed accounts, you may wish to reassure prospective lenders by evidencing the prospect of your future income instead. If you have regular retainer work from clients or contracts for work to be completed in the coming months, these are all worth demonstrating at application stage.
Additional points of note
It’s important that you don’t dive headfirst into a re-mortgage deal simply because you are likely to be accepted. As with all mortgage applications, you can also shop around for the best remortgage deals, based on the value of your property and how much you wish to borrow. This fairly simple task is well worth your effort in the long run. You can compare mortgages using Trussle’s search engine, which gives you access to up to 90 potential mortgage lenders and thousands of mortgage deals. This allows you to filter out deals with expensive lender’s fees – if that’s your preference, and choose between fixed or variable rate deals that are right for your circumstances.
Other important re-mortgage application checks include your credit score. Make sure you have a good credit history, as this will put you in good stead when refinancing your property. Don’t forget to double-check that your name is included on the Electoral Roll at your property, as certain lenders use this as part of their background checks and can lead to costly application refusals.
Working as a self-employed individual should not be a barrier to you re-mortgaging. Each lender operates with different criteria, so it may be wise to speak with a specialist broker that can pinpoint lenders who readily accept applications from the self-employed.