Getting a Mortgage as a Freelancer
Everything you need to know about getting a Mortgage as a Freelancer and how a Mortgage Broker can help
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In this article, we’ll explain how to get a mortgage if you’re a freelancer, what information mortgage lenders will want to see and why speaking to a mortgage broker first can save you a lot of time and, potentially, some money too.
Can you get a mortgage as a freelancer?
The simple answer is yes, however, it will likely be harder to secure the mortgage you need than if you were employed in a salaried role. This is mainly down to the more complex nature of how freelancers earn their income and knowing which lenders will look more favourably on these types of applications.
Regardless of the possible difficulties you might face there are ways and means to overcome stricter eligibility criteria and provide affordability evidence that will satisfy a mortgage lender. Getting direction from an experienced mortgage broker is highly advisable in this situation because it’s not always straightforward and all lenders work differently.
The good news is that as the number of people becoming self-employed continues to grow, so does the pool of mortgage lenders willing to consider mortgage applications from someone on this basis – including freelancers.
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How your income will be assessed
Generally, lenders will be looking for proof of your income over the course of a certain period of time. Mainstream lenders will likely want to see a track record of three year’s worth of revenue, while some more specialised providers might accept two years of accounts, or as little as one year. Make sure your accounts and taxes are all up-to-date and documented, as you will need to produce firm evidence.
Bear in mind there are no specialist products out there for freelancers. That said, there is leeway for freelancers and certain benchmarks in place in order for lenders to assess such applicants, and many will do this on a case-by-case basis.
How much you could borrow
The amount you can borrow will be roughly the same as is standard, which is that lenders commonly allow borrowing up to 4x or 4.5x your annual income, but there are some cases in which you might qualify for 5x or even 6x your income too.
To get a better idea of what you might be able to borrow, use our self-employed calculator. It can’t take into consideration the many nuances involved in freelancer mortgage applications, that’s where an experienced mortgage broker would be able to help, but it can help give you an initial estimate.
Self-Employed Mortgage Calculator
This calculator can work out your maximum mortgage borrowing if you're self-employed. Select your trading style from the drop-down menu, then enter your income and outgoings, and our calculator will do the rest.
You could borrow up to
Most lenders would consider letting you borrow
This is based on 4.5 times your net profit or the total income declared. To borrow more than this, you will need to speak to a mortgage broker who specialises in self-employed borrowers
This is based on 4.5 times your share of the partnership's net profit or total income declared. To borrow more than this, you will need to speak to a broker who specialises in self-employed borrowers
This is based on 4.5 times your share of the net profit/salary plus dividends, or total income declared. To borrow more than this, you will need to speak to a broker who specialises in self-employed borrowers.
This is based on 4.5 times your income. To borrow more than this, you will need to speak to a broker who specialises in self-employed borrowers.
Some lenders would consider letting you borrow
This is based on 5 times your net profit or your total income recieved. This income multiple is often unavailable to borrowers who aren't applying through a mortgage broker.
This is based on 5 times your share of the partnership's net profit or your total income recieved. This income multiple is often unavailable to borrowers who aren't applying through a mortgage broker.
This is based on 5 times your share of the net profit/salary plus dividends, or your total income recieved. This income multiple is often unavailable to borrowers who aren't applying through a mortgage broker.
This is based on 5 times your income. This income multiple is often unavailable to borrowers who aren't applying through a mortgage broker.
A minority of lenders would consider letting you borrow
This is based on 6 times your net profit or the total income declared. This income multiple is only available under specific circumstances and is usually only accessible via a broker.
This is based on 6 times your shares of the net profit or total income declared. This income multiple is only available under specific circumstances and is usually only accessible via a broker.
This is based on 6 times your share of the net profit/salary plus dividends, or total income declared. This income multiple is only available under specific circumstances and is usually only accessible via a broker.
This is based on 6 times your income. This income multiple is only available under specific circumstances and is usually only accessible via a broker.
Now that you have a rough idea of your maximum borrowing, get in touch to speak to a mortgage broker who can provide bespoke calculations and access to the best rates and deals.
Other criteria you’ll need to meet
This is dependent on the usual factors of how much deposit you have to put down, your credit rating and what your income is.
Because your options might be more limited than those of on-the-books staff, it would be beneficial to put down as much of a deposit as you can in order to shrink your loan-to-value borrowing and open up your options.
Proof of income will be the key to your mortgage approval though. You’ll need to demonstrate this via a number of different documents, but ultimately lenders will want to see that you’ve had a consistent wage for a significant period of time and that you’ve managed that well, even during periods of low or no earnings.
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How to get a mortgage as a freelancer
Getting a mortgage as a freelancer doesn’t necessarily have to be overly complex as long as you follow a few simple steps to make the process more straightforward. The first thing to do is make an enquiry with us and we’ll arrange for a specialist mortgage broker to contact you who can help with:
- Working out how much you can borrow, based on your specific earning patterns and outlining how that translates into yearly income
- Guidance on how to download and optimise your credit reports along with advice on what eligibility criteria mortgage lenders will look for
- Identifying the best mortgage lenders and preparing all the necessary supporting documentation to give your application the best chance of success – first time!
How to increase your chances of acceptance
In addition to the steps outlined above there are a number of other actions you can take to boost your chances of getting the mortgage approval you need, such as:
- Saving up a large deposit (anything above 25% should mean a much larger pool of lenders willing to consider your application)
- Evidence of consistent income and solid track record in a specific profession for more than three years
- A forecast of any future contracts and income to come that has already been planned and agreed
- A full, prepared, explanation of any gaps in employment
Which lenders will consider your application
Almost all lenders will have some provision for freelancers, but which lenders will be open to your circumstances depends on a number of factors, including how many years of figures you are able to provide (NatWest needs two year’s worth, Kent Reliance needs three but Stafford Railway Building Society will take the latest year’s alone).
A number of lenders will potentially consider you if you are using the latest year’s figures as a projection from your accountant (Norton Home Loans, Together) and others might not take your age into account if you’re an older freelancer (Barclays, Livemore Capital, Loughborough Building Society).
Other examples of what lenders might need:
- Accord Mortgages: Will accept evidence of net profits from sole traders and partnerships from the last three years and company director salary and dividends, but not retained profits.
- Barclays: Will take on board net profits from sole traders and partnerships for the past two years, as well as salary, dividends, and profits of company directors.
- HSBC: Will accept evidence of net profits from sole traders and partnerships from the last three years. They won’t accept company directors’ salary dividends but will accept net profits.
The criteria for freelancers are complex, but this is where having a professional pair of eyes and expertise can be a huge advantage when it comes to which provider is right for you.
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Will a SEISS grant affect my application?
This will really depend upon which mortgage lender you approach. Some will accept evidence that an SEISS grant was taken and some won’t. If you have a strong track record both prior to and after the COVID-19 pandemic period then this will also help your cause.
Get matched with a mortgage broker experienced in self-employed cases
The process of approving a mortgage to freelancers can be risky for lenders. With the right professional help behind you, you should be able to convince them that you are able to manage your repayments now and in the future, and are a worthy candidate for mortgage approval.
Applying to the wrong place with the wrong information could lead to a refusal, which would be detrimental to your credit score. We can match you with the right kind of specialist broker from our network of highly trained and five-star rated experts, who will be happy to hold your hand and provide much-needed support in your quest for a freelancer mortgage. Call us for a free initial consultation on 0808 189 2301 or make an online enquiry.
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