Self-employed, How much can I Borrow?

This is the first question for most people looking to purchase. When you’re self-employed this isn’t such a straightforward one to answer.

First question is – How long have you been self-employed?

A handful of lenders will work on one year’s accounts but, a handful is probably being over generous. Most will want two if not three full years accounts before they will consider your mortgage application.

Second question – How much do you earn?

This really does provoke a range of answers, most of which are incorrect or illegal. The old favorite stock answer is “whatever I need to earn, my accountant will put down whatever my income needs to be”.self-employed

Another is, “I pay myself £1000 a week so I’m on £52000 a year”. A realistic answer is “I haven’t got a clue but I know my accountant does a good job & I don’t pay a lot of tax”.

I’m afraid that the lenders have got wise and closed the loop-holes around the self-employed, sorry there is now no such thing as “self-cert” anymore.

Lenders now require legitimate proof of income by way of the tax returns your accountant has submitted to HMRC.

To find out what your income really is &, what’s more important – what the lender will accept, you need to call HMRC on 0300 200 3310 and ask them to send you your latest three years SA302’s.

You will need to have your NI number as one of the qualifying answers.

Once you receive your SA302’s you can clearly see what your declared income is and will be aware if you are able to move forward with your mortgage application. The figure usually used is “Total Income Received” & best case scenario is that you will get up to 5 times this amount but 4.5 times is more realistic.

Some lenders will use the latest year’s figures if they are increasing, some will take an average of the latest two years, some, especially if there is a drop in profit will want to use an average of the latest three years.

You then need to deduct various commitments, make allowances for the number of dependent children, term of mortgage etc but at least you now know what you earn. With this information, a mortgage adviser will be able to use the lender’s affordability calculators to find out who will lend you the most & what rate it will be issued at.

Call Zing Mortgages now to find out how much you can borrow but, save us all some time & order those SA302’s first.

Believe me, until you have these figures its all pretty much guesswork, which is good for no-one.

Tags:

Back to news
Beside you all the way
At Zing, we’re here to help you throughout your mortgage application. From your first enquiry through to completion - we’re here to make the whole process easier for you.
03332 414 113
Monday - Friday: 9:00am - 5:00pm
What our clients say
4.9/5
Efficient and Excellent Experience
1st time buyers and they made the whole process really easy from start to finish. Kept us up to date throughout and answered any questions we had strait away. Thank you Zing
Rion in Sevenoaks
Best choice we made
Gary was patient & understanding when dealing with our mortgage. Ellie was brilliant with weekly updates that increased to daily as we neared completion. Can't thank the team at Zing enough, would recommend to anyone.
Julie in Southend-On-Sea
Great service
Great service from start to finish. Lee was very knowledgable and got us the deal we where looking for. Was kept informed and he was always available, or called us back. Would highly recommend.
Brian in Ware
Excellent
Very nice service I will recommend it to my friends and if I need will use again. Very big thanks for Ian.
Volodimir
Good overall service
We have used zings services for a number of years now and have always been very happy with there services, although we had a bit of a slow start this time everything was completed well and would recommend them again for the future.
Steve in Essex
Would recommend
They chased the solicitors continuously for what was a long tome! They kept me up to date throughout which I really appreciated
Denise
Feefo logo