Documents needed for a Self-Employed Mortgage

Self-Employed people often worry about applying for a mortgage because they’re unsure which documents mortgage lenders will accept. What exactly do you need to prove your business is viable and your income will cover your mortgage repayments?

In our mini guide to the Documents You’ll Need For A Self-Employed Mortgage, we tell you which documents you’ll need to get ready in advance. Plus tips on the simplest way to secure a great mortgage offer.

What are Self-Employed mortgages?

The mortgage products lenders sell are the same for all applicants, the difference is, how you prove your income. For employed workers, it’s a simple case of providing copies of payslips and a P60, for Self-Employed applicants it’s a little more complex.

However, this guide and a helpful Mortgage Broker used to dealing with Self-Employed mortgage applicants, will make the whole process run smoothly.

What specific documents will I need?

The documents you’ll need depend on the type of business you run. They will be different for sole traders and partnerships, limited company directors and contractors.

Here’s where your accountant comes in. Tell them you’re planning to purchase or remortgage a property, so they can start compiling your accounting documents in good time.

Documents for Sole Traders and Partnerships

If you’re registered as a Self-Employed Sole Trader or Partnership with HMRC, your Self Assessment form SA302 is key. It shows how much you earned and the tax you paid in each financial year, so ask your accountant to request these for you.

You’ll also need two years’ of accounts, starting with the most recent tax year. This provides details of the income your business generates minus your business expenses and shows how much retained profit (net profit) you have at your disposal.

You’ll also need to provide details of your monthly expenditure (business and personal), prove your identity and demonstrate you’re not a credit risk. Here’s a list of everything you’ll need:

• SA302 forms from HMRC
• Self-Assessment Sole Trader accounts – preferably for the last two or three years
• Bank statements – business and personal for the past three complete months
• ID documents – scanned copies of your passport and driver’s licence
• Council tax bill
• Recent utility bills
• Credit report from a credit reporting agency

 Documents for limited company directors

If you run a limited company and earn income from other sources, like Buy to Let property, you’ll need to provide limited company as well as self-assessment accounts.

Lenders use different criteria to assess affordability.  Some will base their assessments on salary earned and dividends drawn, while others will take (net) retained profit into consideration.

The main documents you’ll need include:

• Finalised Limited Company Accounts for the most recent and previous tax years
• Self-Assessment accounts – if you earn Self-Employed income from other sources
• Copies of your SA302 forms from HMRC
• Your director payslips showing your PAYE income
• Dividend drawdown slips
• Bank statements – business and personal for the past three complete months
• Scanned copies of your passport and driver’s licence
• Credit report from a credit reporting agency

How do I improve my chances of being accepted by a lender?

• Make sure your details are correct on the Electoral Register
• Have a good credit score – your credit rating is important, so pay off any debt
• A high deposit, e.g. 15 to 20 per cent will help you secure a mortgage offer

How can Mortgages by McAteer help me with my documents?

Because we’re experienced Mortgage Brokers, we’re used to helping Self-Employed mortgage applicants secure home loans from a range of lenders. Talking to us first about the property you want to buy or remortgage means we can give you a head start on getting the right mortgage for you.

We’ll save you time by helping you compile all the documents you need, and we’ll submit these to the lender for you, along with your mortgage application.  We’ll also give you guidance on how to get the documents you need if you don’t already have them.

As authorised and regulated Mortgage Brokers, with our office registered in England, we are regulated by the Financial Conduct Authority (FCA).  This means we are authorised to discuss your finances in confidence.