Most lenders lend around four to four and a half times your assessed income, but the figure they use for your income is what really matters. A limited company director might be assessed on salary and dividends by one lender and on salary plus their share of net profit by another.
That difference can change your borrowing by tens of thousands of pounds. We show you how different lenders calculate your income so you know which mortgage deal gives you the right loan amount.
For sole traders, lenders usually ask for two years of SA302 tax calculations and the matching HMRC tax year overviews. Limited company directors normally need two years of company accounts prepared by a qualified accountant, plus personal tax calculations showing salary and dividend payments.
You will also need three months of personal bank statements, sometimes business bank statements, proof of ID and proof of your deposit. If you have rental income or other income, bring evidence of that too.
Yes. Many lenders assess contractors on their day rate rather than their accounts. They take your day rate and work out an annual figure, which often gives a much fairer picture of what you earn.
You will usually need a current contract and some history of contracting in the same line of work. We regularly help IT contractors, engineers and people working through CIS in construction.
Lenders assess self employed applicants in the same core areas as everyone else, with extra focus on how stable the business is.
Trading History: two years is standard. One year is possible with some lenders.
Your Income: net profit for sole traders, salary and dividends or company profit for directors, and day rate for many contractors.
Credit History: a good credit score widens your options. If you have adverse credit, you could be referred to our sister company, Alexander Southwell Mortgages, as this may fall under the specialist category.
Existing Debts: car finance, loans and credit cards all reduce what you can borrow.
