Mortgage One Year Accounts

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Self-Employed mortgage with one year’s accounts 

Self-Employed people may worry that they will find it more difficult to get a mortgage. That might have been the case some years ago, but today most providers will lend to the Self-Employed. Often lenders will request two years’ worth of accounts – but if you haven’t been in business that long, Easy Street could help.

Could I get a mortgage if I’ve only been Self-Employed for one year?

The reason that a lender wants to see company accounts is to get a sense of your income. Your earnings are the basis for the loan amount they will offer. A Self-Employed person’s income is less predictable than that of someone on a salary, so the lender wants evidence of your annual earnings, ideally over two to three years. That said, some specialist lenders will accept just one years’ accounts, and some will even take 9-10 months’ business records – as long as your business is doing well.

How do I prove my income with only one years’ accounts?

You prove your income by sharing documents, ideally a set of accounts certified by a qualified accountant. You may also need to supply your self-assessment (SA302) for the last tax year, stating your annual earnings. As with any borrowing, lenders will also look at your credit score. Small scale debts or late payments aren’t usually a problem, but if you have particularly bad credit such as CCJs or bankruptcy you will have a very narrow choice of lenders and high interest rates.

How does it work for a Sole Trader, a partnership or if I have a Limited Company?

Sole traders: Lenders will see your business profits as your income, so they will often request self assessment records to confirm your income. Partnerships: You will be assessed on your share of the partnership’s profits. Either company accounts or tax details are usually needed. Limited company: The mortgage provider will usually look at your final accounts for the year. Your loan amount is usually based on your stated salary and dividends – but some lenders will use your net profit, which usually means you could borrow more.

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How much could I borrow?

Mortgage lenders will usually let you borrow around four to five times your income. This is the same for everyone, regardless of their employment status.

Put your stated annual income into a mortgage calculator to see how much this might be and what the monthly repayments will cost.

The lack of sick pay makes self-employment more risky than a traditional employed job, so you might want to consider insurance to ensure you can meet all repayments on your mortgage. Income protection pays your bills if you can’t work due to illness or injury.

What deposit will I need?

The absolute minimum for a deposit is 5% of the property value, but you need good credit for this level of borrowing and rates will be high.

If you can save up 15% or more you will get better rates and a wider choice of lenders. The size of your monthly repayments will fall as the deposit increases. Again a mortgage calculator – or an expert broker – could show you how different deposit amounts will impact your monthly payments.

Could I get Help to Buy as Self-Employed with one year’s accounts?

The UK government brought in the Help to Buy scheme to help people get on the property ladder. These are all available to Self-Employed borrowers.

Available for First Time Buyers only, with the Equity Loan scheme you could buy a new build home with just a 5% deposit, and an interest-free loan from the government boosts this up to 25% (45% in London). This way you qualify for better rates.

With Shared Ownership, you part-rent, part-buy a property, usually from a Housing Association.

Right to Buy is open to people who have rented from a local authority for two or more years, and allows you to buy a home with a discount.

How could a Mortgage Broker help?

Here at Easy Street, we’ve helped many Self-Employed people achieve their property plans.

As professional mortgage brokers, we compare hundreds of mortgage deals on your behalf, across high street lenders and more specialist companies.

Our mortgage advice will help you find an affordable loan with just one years’ accounts.

We even take charge of mortgage applications to make the process stress-free. If you need a specialist product, from Buy to Let mortgages to equity release, we could help.

We are specialist mortgage brokers who are authorised and regulated by the Financial Conduct Authority. Contact us today for help to obtain a mortgage that works for you.

Equity release includes Lifetime Mortgages and Home Reversion Schemes. We can advise and arrange Lifetime Mortgages and will refer to an approved specialist for Home Reversion schemes.

What Does A Mortgage Broker Do?

Ian Symmonds, Director of Easy Street and Financial Adviser, talks us through the role of a mortgage broker on the Mortgage & Protection Podcast.

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