Self Employed Mortgages
Self Employed Mortgages Explained
If you are self-employed it can sometimes be more difficult to get a mortgage. There are stricter mortgage lending requirements if you work for yourself. This is because lenders can sometimes see you as being a little bit more riskier because your income may fluctuate. However, it is possible to get a self-employed mortgage and we can help you.
You will be classed as self-employed if you own around about 25% of a business, or more. Those who are in a partnership are treated the same as those who are sole traders.
You have to prove how much you earn when you apply for a mortgage, because lenders will want to make sure you can afford the monthly payments. Proving the regularity and certainty of your income is sometimes more difficult if you’re self-employed. We can help you get the right paperwork in place to help secure the right mortgage for your circumstances.
Your home may be repossessed if you do not keep up repayments on your mortgage.
What types of mortgages are there?
Fixed rate mortgages
A fixed-rate mortgage is a home loan where your interest rate is guaranteed to stay the same for a set period of time, giving you peace of mind because you know exactly how much your payments will be every month.
Variable rate mortgages: Tracker mortgages
In short, a tracker mortgage is a home loan where your interest rate will ‘track’ the Bank of England’s base rate, plus a set percentage. This can mean your payments will reduce as the interest rate reduces, but it can also mean they increase too.
The base rate is currently at a record low of just 0.1%, due to changes caused by the COVID19 pandemic. So, if the interest rate on a tracker mortgage was the base rate +1%, the amount of interest you would pay is 1.1%. If the base rate went up, the interest rate on your tracker mortgage would also rise.
Variable rate mortgages:
Discount mortgages
With a discount mortgage you pay the lender’s standard variable rate, with a fixed amount discounted. For example, if your lender’s standard variable rate was 5% and you had a 1.5% discount, you’d pay 3.5%.
Repayment mortgages
A repayment mortgage means as long as you meet all your payments every month, you will be repaying off part of your capital (the money you borrowed) and part of the interest rate. At the end of your mortgage term the property will be fully repaid and will be fully owned by yourselves.
Interest-only mortgages
Unlike a repayment mortgage, you only pay off the interest portion of your loan. This means you have to make sure that at the end of your mortgage term you have enough money saved to pay off the outstanding capital in one lump-sum in order to complete your mortgage agreement and own your home.
Try our mortgage calculator to get an idea of what you could borrow. No credit checks required.
