Remortgage When Self-Employed
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Remortgage When Self-Employed
Is it harder to remortgage if you’re self-employed?
I wouldn’t describe it as harder. When you’re self-employed, you’ve just got to be a little more organised in terms of the paperwork and documentation you have to hand.
As we always say, speaking to an advising firm that understands self-employed clients is really critical to enable you to get the right result when looking to remortgage.
How long do you have to be self-employed to remortgage? Can you remortgage if you’re newly self-employed?
That can vary depending on which particular lender you approach for a remortgage.
As a general rule of thumb, the minimum time that a lender would want you to be self-employed would be at least one full tax year. For access to a wider range of products, more lenders would potentially accept you once you had two full tax years.
Being newly self-employed does cause a degree of problems with lenders, as you need to prove what you’ve earned over at least one full tax year.
How does the self-employed remortgage process work?
It’s all about the type of documentation the lender will ask for. How lenders assess income is slightly different for a self-employed applicant. The overall process of remortgaging, though, once you’ve got your proof of income in, is identical to that for somebody who’s employed.
Can you remortgage with no proof of income if you are self-employed?
There’s a short answer to that question – no. You’d always need some degree of proof of income to demonstrate to the lender that you’re able to afford to repay that mortgage.
Can I remortgage if I have bad credit and I’m self-employed?
Yes, depending on the level of the bad credit and how that looks on your credit report. There are various lenders that sit just behind the well-known high street brands, and are geared up to help people who have bad credit. Being self-employed and having bad credit is certainly something we could help with.
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Can a self-employed person be declined a remortgage? Why might that be?
With any application, there is an assessment process to go through. The lender will look at primarily three key areas – your income, deposit level and credit score. You could be declined based on any one of those.
If you’re self-employed and your business has made less profit in the last couple of years, there could be question marks around the sustainability of that income.
How can I better my chances of a good remortgage as someone who is self-employed?
It’s mainly about having those documents to hand. We look back over previous tax years, so you might need to speak to your accountant or go onto the HMRC website to download previous tax returns and tax year overviews. There’s a bit more involved with the documentation we need to see, so being prepared with those is absolutely key.
It also depends on when we are in the year. If we’ve gone past the 5th of April you would potentially be able to do a new tax return. If the latest year has been slightly better than the previous year, that’s helpful.
Again it’s about getting guidance from somebody who understands what a lender is going to look at and can help you get the right documents to hand.
What are the benefits of remortgaging?
First and foremost, the main benefit is ensuring that you’ve got the right available product for your circumstances, so you’re not going onto an interest rate that’s higher than you need to pay.
You may also want to look at borrowing some extra money to do some home improvements, for example. A remortgage gives you the opportunity to make changes to your mortgage and perhaps borrow more.
Usually, once you’re outside of a product term, you won’t have any early repayment charges, so it’s an ideal opportunity to sit down with somebody and look at any changes that you’d like to make.
How can a mortgage broker help with a remortgage for the self-employed?
A successful remortgage is about being prepared, having the right documentation in place and understanding how a lender will view your income. If you’re a limited company director, especially, there are different ways lenders can assess your earnings.
One lender may look at things differently to another, and you may get a different outcome in terms of how much you could borrow and the interest rate you could get.
A mortgage broker who is well versed in helping self-employed clients will look at your circumstances and guide you through. Essentially, we make sure you’re put with the right lender for your specific circumstances.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
