Joint Mortgages when one Applicant is Self-Employed 

Can you get a joint mortgage if one applicant is Self-Employed?

Applying for a joint mortgage when one applicant is Self-Employed and the other is not, is absolutely possible. Mortgages do not differ for Self-Employed applicants, other than in how their income is assessed as part of the application process, so you will both have access to the same mortgage products.

PAYE applicants won’t need to provide such substantial proof of their working history as Self-Employed applicants, as this type of income is still considered by Mortgage Lenders to be the more stable of the two. This also means that if one applicant is a PAYE earner, it will probably benefit the application if you list them as the lead applicant, unless they have bad credit.

How much can you borrow if one applicant is Self-Employed?

How applicants earn their income will not directly affect the loan amount, so long as the Mortgage Lender is confident that you will be able to afford the repayments on your mortgage between you, in the long-term. 

You can typically borrow a multiple of between three and five times your combined income, although this will vary based on a number of factors, including your credit score, the stability of your income and your other outgoings.

What documents do you need if one applicant is Self-Employed?

The part of the application that will differ is how each applicant proves their income. If one applicant is traditionally employed with PAYE income, they usually only need to provide the most recent three months payslips and bank statements. 

Self-Employed applicants will have to go further to prove the stability of their income, usually providing two to three years proof of stable income in their current role. The Mortgage Lender will use an average of the income they have earnt in this two to three year period, as the final income figure on which to calculate the loan. This mitigates some of the perceived risk in fluctuating income.

The documents needed from the Self-Employed applicant to prove their income vary slightly, depending on the type of Self-Employed business activity they participate in.

Sole Trader, Freelancer or Contractor

Sole Traders and Freelance workers have to provide their SA302 tax calculations. Contractors will either provide the same, or, if you earn a permanent day-rate, some lenders will use an annualised version of this.

Limited Company Director

As a Limited Company Director, lenders use your personal salary and dividends to calculate the average income that they will use to determine your loan. You’ll need to provide certified accounts, SA302 forms, and often, business banking statements, as per the lenders’ criteria, usually two to three years.

It is possible to find lenders who will consider your retained net business profits, however, this is fairly rare and only offered by specialist lenders.

Partner

If you own 25% or more of a business, as a partner, then lenders will consider an average of your share of the net profits in support of your mortgage application. If you own a smaller share, this cannot be considered income. The documentation required will be the same as for a Limited Company Director.

Does a mortgage have to be in joint names?

If you buy a property with another person, they do not have to be included on the mortgage in order to be included on the deeds to the property.

As a mortgage based on combined income will afford you a higher loan, it’s advisable to apply jointly, however, if there is a particular reason not to, for example, if one applicant has particularly poor credit, you should apply individually.

How can Vivid help if one applicant is Self-Employed?

Whether you’re a First Time Buyer, Home Mover or looking to remortgage, here at Vivid, our skilled Mortgage Brokers can help you find a competitive mortgage deal to suit you. We regularly help clients to secure a suitable joint mortgage, whether both applicants are PAYE, Self-Employed, or one of each. 

Having prior knowledge of the criterias for a broad spectrum of lenders will help us to ensure you avoid approaching lenders who won’t consider your circumstances, as well as assist you in preparing for a successful application. 

Once we’ve had a thorough look at your circumstances, we will know instantly whether you should apply jointly or individually, who should be the lead applicant and who can offer you the most competitive rates.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.