The way the world is right now, being a business owner looking to apply for a mortgage is tougher than usual. There have been a lot of criteria changes over the last 6 months. Here are a few heads up on what you might need to know about mortgages for self-employed…
Despite what you might have heard, the government introduced the bounce-back loan to help business owners reinvest money into their businesses. The bounce-back loan is not to help you buy your first home! It’s a loan, not savings, so when it comes to making your mortgage application you will struggle to find a lender that counts the bounce back loan as your form of deposit.
Every business has been financially affected in some way by the world-wide pandemic. When we’re making mortgage applications for business owners, underwriters are asking for up to 6 months’ worth of bank statements. This is to see what the effects have been on your business and if the revenue has started to come back in again. If it hasn’t, they will probably want to know why.
Income Support Scheme
Just like the furlough scheme, this was introduced to financially help those who are self-employed. If you’re looking to make a mortgage application and have used the scheme in the last 3-6 months, then lenders are going to ask to see proof that you have returned to work and that your business volumes are back to where they were.
Earlier in the pandemic, the government announced plans where businesses could claim a grant between £10k to £25k depending on their business premises. We’ve unfortunately seen these having a negative impact on mortgage applications across the UK. If your business has received support in the form of a bounce-back loan, coronavirus business interruption loan, the furlough scheme, or the self-employed income support scheme, it’s really important that your mortgage broker knows exactly where your business stands. The good, the bad, AND the ugly! This will ensure you receive the best advice.
Lenders will work off the latest year if they’re within 18 months of your mortgage application. So, if your year-end is April 2019, we’re getting close to that 18-month stage. On recent mortgage applications, we’re seeing that banks are asking for the latest year to be produced. Reach out to your accountant and make sure they know everything about your business. This ensures that they can support you with your mortgage application.
There have been hundreds of criteria changes in the last 3-6 months that happen over-night and there will be more to come. Our best advice is to be fully prepared with all of your supporting documentation. This way, whoever you are working with can provide you with the best mortgage advice.
Mortgages for self-employed can prove tricky in the current climate, but not all hope is lost! We offer advice for first-time buyers, remortgages, and self-employed. If you’re stuck where to go, make sure you reach out to us for mortgage advice that is made for you:
Disclaimer: As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments.