How to Secure a Mortgage When You’re Self-Employed
Securing a mortgage can feel a daunting task for contractors and the self-employed. Traditional lending criteria often favours salaried employees, leaving many contractors wondering if they can qualify at all. With the right preparation and guidance, you can successfully navigate the mortgage process.
At Resolve Financial Solutions, we understand the unique challenges faced by contractors in Weybridge, Reigate and beyond. We will walk you through the essentials of securing a contractor mortgage.
Why Are Contractor Mortgages Challenging?
Lenders often perceive contractors as higher risk due to the variability of their income. Unlike salaried employees with predictable monthly pay, contractors must demonstrate their financial stability through alternative means.
What documents do you need?
To apply for a contractor mortgage, you’ll typically need:
- Contracts – Evidence of your current and past contracts (usually for the last 12-24 months).
- Bank statements – Personal and business statements to showcase income and expenditure.
- Accounts – up-to-date accounts prepared by a chartered accountant.
- Tax Returns (SA302 Forms) – proof of income from HMRC for the past 2-3 years.
How lenders Assess Contractor Income
Mortgage lenders often calculate income based on:
- Day rate contractors: Annual income may be calculated by multiplying your day rate by the number of days worked annually (e.g., £300 / day x 240 days = £72,000)
- Fixed-term contracts: Income is evaluated based on your contract’s duration and value.
Practical Steps to Improve Approval Chances
- Work with a specialist broker, like us. Partnering with an experienced broker who understands contractor mortgages can help you access lenders who favour your circumstances.
- Keep accounts up-to-date. Accurate and well-prepared financial records are essential.
- Save for a larger deposit. A higher deposit (e.g., 15%-20%) can make you more attractive to lenders.
- Check your credit score. Ensure your credit score is in good shape by paying bills on time and minimising debt.
- Demonstrate stability. Highlight consistent contract work and long-term clients to reassure lenders of income reliability.
Why Choose Resolve Financial Solutions?
Based in Weybridge and Reigate, we specialise in helping self-employed individuals and contractors navigate the mortgage process. Whether you’re a first-time buyer or looking to remortgage, our team provides personalised advice tailored to your unique needs.
Take the stress out of securing your contractor mortgage by contacting us today to discuss your options. Call 01932 943028 or email info@resolvefs.co.uk
*Your home may be repossessed if you do not keep up repayments on your mortgage.