The UK\u2019s freelance\/self-employed sector has grown steadily over the past decade.\r\n\r\nAs it stands 14.8% of the working population is self-employed, as a number of people decided to go it alone after being laid off due to the recession or to favour the potentially attractive financial rewards and work\/life balance that comes with working more flexibly.\r\n\r\nThis of course brings greater need for lenders to change their policy and be more flexible to cater for those on incomes that are not straightforward basic salaries, and thankfully, for many for those getting a mortgage as a freelancer in the UK, we can now say that there are some great options out there.\r\n\r\nIn this article we\u2019ll look at:\r\n<ul>\r\n \t<li><a href="#how-to-freelance">How to get a freelancer mortgage<\/a><\/li>\r\n \t<li><a href="#why-do-they-struggle">Why do freelancers struggle to get approved?<\/a><\/li>\r\n \t<li><a href="#length-of-time-freelance">How long you need to be a freelancer before you can get a mortgage?<\/a><\/li>\r\n \t<li><a href="#freelance-calculate">Calculate how much you can borrow as a freelancer<\/a><\/li>\r\n \t<li><a href="#freelance-BTL">Freelancer buy to let mortgages<\/a><\/li>\r\n \t<li><a href="#freelance-bad-credit">How to get a freelance mortgage with bad credit<\/a><\/li>\r\n<\/ul>\r\n[feefo-banner]\r\n<h2 id="how-to-freelance">How to get a freelancer mortgage<\/h2>\r\nSo can you get a mortgage as a freelancer? The simple answer is \u2018yes\u2019, depending on a number of criteria.\r\n\r\nIf you\u2019ve had a look online already, you\u2019ll know that comparison tables for freelancer mortgages don\u2019t really exist, and that generic rates tables are pretty useless for borrowers that have specific needs as they don\u2019t tell you which lenders are able to cater for which type of income.\r\n\r\nThankfully, the advisors we work with are experts when it comes to mortgages for self-employed people and we can put you in touch with exactly the right mortgage broker for freelancers and contractors \u2013 someone who has access to the whole market, and who understands contracts and lending policy to be able to match you with the best lender.\r\n<h2 id="why-do-they-struggle">Why do freelancers struggle to get a mortgage approved?<\/h2>\r\nWhether you\u2019re a freelancer or contract worker, if you know where to look, there are plenty of options available if you want to apply for a mortgage. Many lenders have tightened their lending criteria, which has made it more difficult for freelancers and contractors in general, but this has actually opened up new markets for specialist lenders who are offering competitive deals.\r\n\r\nSadly, most lenders decline mortgage for freelance workers and contractors without a perfect 3-year history of income and chunky deposit, and most brokers don\u2019t understand the contracts or lender policy properly to help. Why?\r\n\r\nTo start with, most of them are not specialist freelance mortgage brokers, so if they don\u2019t understand the industry, they are rarely able to help. So if you\u2019re a freelancer applying for mortgage, you should talk to one of the advisors we work, they are specialists and will do everything they can to help you get a positive outcome.\r\n<h3>Are you Employed or self-employed?<\/h3>\r\nOne problem is that freelancers and contractors tend to fall into the grey area between employed and self-employed, so they may be outside criteria for many lenders, who stipulate 3 years self-employed accounts (when a freelancer might not have these), or permanent employment with a contract.\r\n<h3>Lenders like stability<\/h3>\r\nMany lenders tend to want set, fixed, established, and reliable income on which to assess their lending. If someone is moving contract to contract, or working on multiple small jobs with different clients, they are less able to evidence a stable income.\r\n\r\nIf you are working on multiple jobs, or even one larger project, being classed as self-employed really comes down to who is paying tax and NI. If the client pays you gross then you\u2019re self-employed, if they pay you net and send your tax to HMRC at source, you\u2019re considered as employed by most lenders.\r\n<h3>Most brokers aren\u2019t freelance mortgage experts<\/h3>\r\nMost brokers, even whole of market, rarely come across a freelancer or a contractor, and as such have no experience of which lenders consider applications, what they want to know, what information needs collecting, and what they do and don\u2019t accept.\r\n\r\nAs a result many creditworthy borrowers are turned away (and take to the internet to find us!).\r\n\r\nLenders have thousands of criteria on a world of subjects that make it hard for brokers to keep up, as a result, you really need to speak to a specialist who handles the type of mortgage you need on a regular basis, which is why we exist!\r\n\r\n<a href="https:\/\/enquiries.onlinemortgageadvisor.co.uk\/income-types-advice\/" target="_blank" rel="noopener noreferrer">Make an enquiry<\/a> and we\u2019ll have one of the freelance mortgage specialists give you the right advice.\r\n<h2 id="length-of-time-freelance">How long do you need to be a freelancer before you can get a mortgage?<\/h2>\r\nWhen trying to secure a mortgage the length of time you\u2019ve been going it alone is something lenders will consider. Most lenders want accounts covering three years, although some will consider 1 to 2 years trading and a few may be OK with as little as six months.\r\n\r\nOver time of course, having a variable income as a freelancer is something that becomes less of an issue, as it is easier to build a picture on how sustainable and reliable your income is.\r\n\r\nIf you are new to freelancing or have recently switched from employed to self-employed, you may apply for a mortgage with the wrong lender and end up being declined.\r\n<h3>Getting a mortgage you\u2019re a self-employed freelancer<\/h3>\r\nIf you\u2019re self-employed in the UK, lenders typically require at least three years accounts that show proof of your income, although some ask for two years, and a handful are happy with just one years\u2019 accounts, (one or two can even make exceptions and accept someone trading for just 9-10 months in the right circumstances).\r\n\r\nThe rules here are the same if you\u2019re a sole trader, Ltd company or part of a partnership (less common for freelancers), just the income figures can differ (For a <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/self-employed-mortgages\/mortgages-for-sole-traders-and-partnerships\/">mortgage as a sole trader<\/a> mortgage lenders will mostly use the net profit, Ltd company directors will be based on net profits or salary + dividends).\r\n\r\nThis is evidenced either as accounts preferably prepared by a chartered or certified accountant, or as tax returns, showing how much income you\u2019ve declared to HMRC and the amount of tax you paid.\r\n\r\nThe SA302 can provide this proof, as would a \u2018tax year overview.\u00a0 HMRC no longer provides a paper SA302 form, but many lenders will now accept a downloaded version.\r\n<h3>Getting a mortgage if you\u2019re a freelancer on fixed term contracts<\/h3>\r\nIf you are on contracts that have a fixed date, then there are lenders willing to consider you sooner than this, if for instance, it has been renewed at least once, or you have more than 6 months left to run.\r\n\r\nLenders will look at whether you\u2019ve been in the same profession over the past few years, or whether you\u2019ve had a few different roles. The same role can be preferable but is not essential.\r\n\r\nThe key for most lenders will be how much you earn and how sustainable that level of income will be. We work with advisors who are specialists in this area and have the experience and expertise to help you get a positive outcome.\r\n\r\nIf the question is, can I get a mortgage as a freelancer? And you\u2019re unsure about whether your contract or freelance income is suitable for a mortgage, then make an enquiry and one of the experts can give you the right advice.\r\n<h2 id="freelance-calculate">Calculate how much you can borrow as a freelancer<\/h2>\r\nOnce you have approached a lender who is happy to consider your application as a freelancer, most underwriters will assess your affordability like any other mortgage applicant.\r\n\r\nEstablishing what your income is would be the first step:\r\n<ul>\r\n \t<li>Sole traders: As mentioned above, if you are a sole trader they would use your net profit (often average over the last 3 years, although some will use most recent, which can be higher and thus offer a larger loan),<\/li>\r\n \t<li>Ltd company directors: Most lenders consider salary + dividends, however, some will look at share of (retained) net profit if this is higher, giving a higher loan amount.<\/li>\r\n \t<li>Contractors: Most lenders will look at either the total contract value, or the daily rate. If daily, lenders tend to multiply this by five days a week, and the number of working weeks (typically 46 to 48 weeks) to calculate out how much you\u2019re likely to earn per year.<\/li>\r\n \t<li>Employed workers: Basic salary + any additional income lines (which might be considered as 100% down to 0%, depending on what, and how regular\/sustainable it is)<\/li>\r\n<\/ul>\r\n<h3>Applying the affordability calculation is the next step<\/h3>\r\nSome have complex affordability models and cap at certain loan to income ratios, others will consider simple income multiples from the start, deducting any debts and commitments from this figure.\r\n\r\nUsing your established freelance income on how to \u00a0(whichever method they use to work this out), a typical rule of thumb for a ballpark figure is lending up to 4.5 or 5 times your income (with a handful considering up to 6x income).\r\n\r\nExample: Daily rate = \u00a3200 x 5 days x 46 weeks = \u00a346,000 per year\r\n<table>\r\n<tbody>\r\n<tr>\r\n<td style="text-align: center;" width="179">Income multiple cap<\/td>\r\n<td style="text-align: center;" width="217">Maximum loan<\/td>\r\n<\/tr>\r\n<tr>\r\n<td style="text-align: center;" width="179">4x income<\/td>\r\n<td style="text-align: center;" width="217">\u00a3184,000<\/td>\r\n<\/tr>\r\n<tr>\r\n<td style="text-align: center;" width="179">5x income<\/td>\r\n<td style="text-align: center;" width="217">\u00a3230,000<\/td>\r\n<\/tr>\r\n<tr>\r\n<td style="text-align: center;" width="179">6x income<\/td>\r\n<td style="text-align: center;" width="217">\u00a3276,000<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nAs you can see, the different calculations used between lenders can create a huge range of affordability, so if you have been declined by one lender don\u2019t give up! Make an enquiry and speak to an expert who can give you some accurate advice how to get a mortgage as a freelancer.\r\n<h2 id="freelance-BTL">Freelancer buy to let mortgages<\/h2>\r\nIf you\u2019re a freelancer and want a <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/buy-to-let-mortgages\/">buy to let mortgage<\/a>, this is certainly possible. Most lenders have minimum income thresholds which causes a lot of borrowers on variable, or income that is hard to prove to be declined as they can\u2019t evidence they earn enough. For some lenders this is \u00a315k, others \u00a320k, and some even in excess of \u00a325k.\r\n\r\nThankfully there are some lenders with no minimum income requirements, so long as you already own a main residence and the purchase is for a buy to let property to rent out, and so long as the rental income is enough to cover the mortgage sufficiently.\r\n\r\nIf you don\u2019t own a property at all then most buy to let lenders will treat your personal income as the main driver for affordability, as they would be concerned about the buy to let mortgage being used to obtain a property to live in, to sidestep the need for evidence it is affordable.\r\n\r\nIf you own a main residence and are an experienced landlord with a portfolio of properties, then there are lenders willing to consider the mortgage without any income evidence at all.\r\n\r\nMake an enquiry and one of the buy to let specialists will be able to establish your situation and provide the right advice.\r\n<h2 id="freelance-bad-credit">Will bad credit affect a freelance mortgage application?<\/h2>\r\n\u201cAdverse credit\u201d is a term used to describe someone with credit issues on their credit file (which tracks your payment conduct for 6 years). A less-than-perfect record of repaying credit commitments isn\u2019t always a problem of course, but can cause issues with new lenders, depending on the type of credit issue and when it was registered.\r\n\r\nThankfully there are lenders happy to consider borrowers with all types of credit issue, including:\r\n<ul>\r\n \t<li>Low credit score<\/li>\r\n \t<li>Late payments<\/li>\r\n \t<li>Mortgage arrears<\/li>\r\n \t<li>Defaults<\/li>\r\n \t<li>CCJs<\/li>\r\n \t<li>Debt management plans<\/li>\r\n \t<li>IVA<\/li>\r\n \t<li>Bankruptcy<\/li>\r\n \t<li>Repossession<\/li>\r\n<\/ul>\r\nHaving credit issues can limit the number of lenders you\u2019ll have access to and adding this to the fact you are a freelancer, the options you have maybe even more limited.\r\n\r\nThat said, thankfully there are <a href="\/bad-credit-mortgages\/how-to-get-a-mortgage-with-bad-credit\/">bad credit mortgage lenders<\/a> who accept freelance income and certain types and dates of adverse credit, depending on your loan to value.\r\n\r\nTo get an accurate idea of whether you\u2019ll be eligible, make an enquiry with one of the experts today!\r\n<h2>Joint mortgages with one freelancer and one employed applicant<\/h2>\r\nIf there are two applicants \u2013 one employed and one freelance \u2013 bear in mind that not all mortgage lenders will take the self-employed income into account.\r\n\r\nThose who do accept self-employed income will treat it like any other joint mortgage, working out how much you\u2019re both likely to earn and can therefore afford collectively.\r\n\r\nThose that don\u2019t accept the freelance income may consider that applicant as a financial dependent, and this can not only mean the affordability is based on the employed applicant's income alone, it can further impact the application as lenders will factor in an additional mouth to feed in the household.\r\n\r\nFor this reason, getting a mortgage if freelance means the right advice can be crucial to ensuring the borrowers can get the mortgage they want, factoring both incomes.\r\n\r\nIf no lender will accept the freelance income, then it may be an idea for the employed applicant to take the mortgage in their own name to avoid additional reduction of affordability.\r\n<h2>Speak to an expert freelance mortgage advisor today<\/h2>\r\nIf you like anything in this article or you\u2019d like to know more, call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry <a href="https:\/\/enquiries.onlinemortgageadvisor.co.uk\/income-types-advice\/" target="_blank" rel="noopener noreferrer">here.<\/a>\r\n\r\nThen sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances.\u00a0\u00a0\u2013 We don\u2019t charge a fee and there\u2019s absolutely no obligation or marks on your credit rating.