Self Employed | MYLO Mortgages

Self Employed?

The homebuying process can be hard, being self-employed can make it even harder. We’re here to make the hard part simple.

If you’re self-employed, you may find it a little more challenging to find the right mortgage. Every lender interprets self-employed income differently, so picking the right lender from the start is crucial for a successful mortgage application. A good mortgage adviser will be able to find you the right lender from the start, avoiding any disappointment later on in the process.

You will find lenders may ask for extra documentation, such as tax returns or company accounts to verify your income. This can create additional paperwork and may make the mortgage application process more time-consuming. This is because lenders want to see a steady and reliable income before approving a mortgage to make sure you can maintain your repayments.

Click below and find out how lenders will evaluate your income

Type of self-employed:

Self Employment Eligibility

A limited company is a type of business structure in the UK in which the liability of the company's owners (called "shareholders") is limited to their investment in the company. For the majority of lenders, if you own 20% shares or more in of the limited co. then you would be classified as self-employed.

When it comes to assessing income, lenders will usually use your salary and dividends, or your salary and share of net profit in the business. This will need to be evidenced with your tax calculations and company accounts and bank statements. Lenders want you to be self-employed for a minimum of 1 year, although most prefer 2 years.

CIS contractors (Construction Industry Scheme contractors) in the UK are individuals or businesses that work in the construction industry and are registered with the Construction Industry Scheme (CIS).

The CIS is a tax system that applies to contractors and subcontractors who work in the construction industry, and it requires contractors to deduct tax from the payments they make to subcontractors.

There are some lenders that will treat CIS contractors as employed, which often means your income is assessed more favourably for affordability purposes. This is important because it can mean borrowing the amount required to purchase your dream home.

A sole trader is a type of business structure in the UK in which a single person owns and runs the business and there is no legal distinction between the owner and the business entity.

A partnership is a type of business structure in the UK in which two or more people run a business together. In a partnership, each partner is responsible for managing the business and making business decisions, and the partners share the profits and losses of the business

Lenders usually want to see at least 1 years accounts to evidence your income although in most cases they average your latest 2 years ‘profit from self-employment’ as evidenced on your tax calculations. Some can even work off the latest year's figure if it's higher.

Contract workers in the UK are individuals who are hired to work on a temporary basis, usually for a specific project or task. They are not considered employees of the company they are working for and do not receive the same benefits and protections as employees.

Contracts can be fixed term, zero hours, rolling, agency based and more. Lots of factors will dictate eligibility for a mortgage. Lenders will want to see a history of contracting and a minimum period remaining on the contract. Some lenders might treat a contractor as employed, whereas with others self-employed criteria will apply.

A good mortgage adviser will be able to review a contractor's circumstances and find the most suitable mortgage lender

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