Self-employed and contractors

Self-employed is the area that we here at Mortgage Gold specialise in. Why? Well, We’re self-employed and we get it! It can seem like a nightmare at times and if you fall into the hands of an inexperienced broker, the nightmare can worsen.

Let's start with squashing some common myths;

You don’t need 3 years' accounts - there are lenders that are happy with 1. Of course, if you have previous years trading, the lender will want to see the accounts. Some will take an average over the last two or three years. However, there are some that can work with your most recent figures. If this doesn’t work some can even work with projections alongside previous years trading. Clearly, it depends on your circumstances and we can advise you on which route is best for you.

Do you keep a lot of money in the business? Some lenders work with that too.

Are you a director or a shareholder in a limited company with a low salary but with high dividends? Again, that’s no problem. You are more than able to obtain a mortgage, you just need us to guide you.

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So, let's break this down- what type of self-employed person are you?

Remember, this is a general overview, we will be able to work this out with you if you are somewhere in-between or in a more ‘quirky’ situation.

Sole trader

Net profit is going to lead the way here. How much they use is going to depend on how many years you’ve been trading. If It has fluctuated throughout the years. Then you’ll find that they most likely use an average. If you only have one year's accounts, then the most recent year and a projection will be fine.

Limited company director

Most lenders will use an average of dividends and salary. There is a minority of lenders that will use net profit and salary. What will work best for you?

Short-term Contractor

In mortgage terms there are a few variants to contractors so I will go break them down. If you have been contracting for over a year, without any break, then you’re pretty much good to go. They’ll ask for a signed copy of the contract and if you’re nearing the end of your current contract, proof that it will be extended. Do you know that lenders will use your daily rate if you have one? It often goes very much in your favour!

Overall, there isn’t much difference in the mortgage world between an employed and self-employed applicant other than the stigma and general idea that getting the mortgage is harder. There are no special deals, no different deals...but like the employed, you need us to steer you in the right direction. Your Home may be repossessed if you do not keep up with the repayments on your mortgage.