Joint Mortgage One Self-Employed

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Can you get a joint mortgage if one applicant is Self-Employed?

Mortgage Lenders are more interested in the affordability and credit history of their applicants, than how they earn their income. So long as you can prove your earnings and meet the other criteria of the mortgage product, it makes no difference whether each applicant earns their money in the same way or differently to each other.

For the applicants, the process remains the same as any other mortgage application, other than the fact that each partner will need to provide different documentation. For the lender, they will have a slightly more complex calculation, as they will assess both applicants separately before combining their income to determine the loan amount.

The Self-Employed applicant will usually need to provide evidence of an ongoing stable income, as Mortgage Lenders still consider Self-Employed income as more vulnerable to fluctuation, even if the Self-Employed partner earns more. 

You will actually benefit from applying with an employed partner, as listing them as the lead applicant enhances the strength of your application. The traditionally employed applicant usually only needs to provide three months worth of payslips as proof of income.

How much can you borrow if one applicant is Self-Employed?

Once the lender has determined your joint affordability, they will use a multiple of your combined income to calculate the loan. If they are confident that you can afford the repayments on your mortgage, your employment type won’t be a factor. 

If you decide to buy a property using a Standard Residential Mortgage, a multiple of between three and five times your combined income is a typical mortgage offer. The multiple they use will be determined by your overall income level, the stability of your incomes and your credit scores.

What documents do you need if one applicant is Self-Employed

PAYE applicants can expect to provide three monthly payslips and three monthly bank statements. Self-Employed applicants income will be calculated according to their specific business type, but it’s common for them to be assessed on an average of their income over two to three years. It is possible, however, to find lenders who are happy to consider just one set of accounts. Speak to us for guidance in this area.

Sole Trader

Your annual personal income will be used in support of your application. To prove this you will need:

  • Certified accounts for the lenders desired duration
  • Tax Calculations and Tax Year Overview from HMRC to cover the same period of time
Contractor

Depending on how you are paid, different lenders will look at your income differently. For example, some lenders will use your contracted day rate, if you have one, which they will annualise to establish an ‘annual salary’. If you don’t have a day rate, your income will be assessed similarly to a Sole Trader. Requirements are:

  • Certified accounts and Tax Calculations and Tax Year Overview from HMRC
  • Proof of ongoing contract availability
  • Day rate confirmation, where applicable
Limited Company

Personal income and dividends payments are commonly used by lenders, although some will consider your net profits alongside them. This can potentially afford you access to a much higher loan, so speak to us if it applies to you.

If you’re a partner owning 25% or more, your share of the net profits are used in support of the application. In either case, the following are likely to be requested:

  • Certified accounts and Tax Calculations and Tax Year Overview from HMRC
  • Business banking statements
  • Future projected income may be required if you have a shorter trading history

Does a mortgage have to be in joint names?

It’s possible for people to buy and share ownership of the home without having a joint mortgage. This would usually involve having the mortgage in a single applicant’s name and having both names on the deeds to the property.

Unless there is a particular reason to leave one applicant’s name off the mortgage, joint mortgages will almost always result in a larger loan, so it’s worth speaking to our team before deciding what’s best for you.

How can a Mortgage Broker help if one applicant is Self-Employed?

At Heritage Mortgages, our Mortgage Brokers we specialise in accommodating Self-Employed applicants, whether they apply for a joint mortgage or independently. Our current knowledge of lender criterias allow us to recommend the most suitable option for your circumstances, ensuring that you maximise the potential for your new home.

We can also help you prepare before you apply for a mortgage, to give you the best chance of a successful outcome.

Why Heritage Mortgages?