Self-employed borrowers: Are you mortgage ready?
Self-employed mortgage applicants urged to prepare paperwork to meet evidence cut-off date
Self-employed workers planning to buy a new property or remortgage to a new lender over the next few months need to get their paperwork for the 2022/23 tax year in order early so that it won’t delay their applications.
To qualify for a mortgage, borrowers typically need to provide evidence of their earnings over the last two to three years when they submit a mortgage application. However, some lenders will accept one year’s records.
Typically, lenders will want proof of income in the form of accounts prepared by a certified or chartered accountant or through self-assessment tax calculations (SA302 forms), which can be accessed on the HMRC website.
Aaron Strutt, product director at Trinity Financial, says: “Banks and building societies typically require the most recent year-end documentation to be no older than 18 months before the date of a mortgage application. This means figures for 2021/22 can no longer be accepted as the latest year’s figures, and the 2022/23 tax year paperwork will be required instead.”
Which lenders will need to see 2022/2023 accounts for a mortgage application?
Halifax and Santander, for example, have both confirmed that from now on, they will need to see accounts for the 2022/23 tax year when a mortgage application is submitted.
Santander requires Self Assessment Tax Calculation forms (e.g. SA302) plus Tax Year Overviews covering the last two years. SA302s and Tax Year Overviews can be requested from the HMRC or via an online HMRC account).
Lenders are becoming more flexible to the self-employed
Nationwide for Intermediaries reintroduced its five per cent deposit mortgages for self-employed workers with smaller deposits and increased the amount they can potentially borrow up to 5.5 times their salary.
Virgin Money for Intermediaries is keen to attract self-employed borrowers, it takes a share of profit after tax plus salary and allows accounts and SA302’s to be up to 21 months old. Clydesdale Bank also takes profit before tax.
Halifax for Intermediares accepts the last two years Tax Calculations and corresponding Tax Year Overviews or the Last two years finalised accounts. Where the customer has been trading for less than two years, a minimum of one year's accounts will be considered. The latest three months' bank statements for the account, which is used for business purposes, may be required.
Call Trinity Financial on 020 7016 0790 to secure a mortgage or book a consultation
The information contained within was correct at the time of publication but is subject to change.
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