Can I get a mortgage as a freelancer?

14th November 2019 / in Contractor Mortgages & Protection Blog / by Gordon Hunter, MD

The credit crunch & the subsequent impact on the national and global economy led to an increase in the number of people taking a jump into the world of self-employment in the hope of turning their fortunes around.

Since then we have seen a rise in self-employment to around 15% within the UK population – many of those freelancers.

Because of this, there is an obvious need for lenders to keep up with the changes in our society and thankfully it’s looking a bit more straightforward for freelancers wondering if they can get a mortgage or not.

Through speaking to the many clients we have had over the years, we have provided an easy to digest summary, to help freelancers and the self-employed secure a mortgage.

The Office for National Statistics (ONS) report that somebody could be classified as self-employed if they

  • own a business, rather than working for an employer
  • agree a fixed price for their work with their employer or client
  • decide on their own schedule when work is available
  • can work for more than one client
  • provide the tools, equipment or materials that are needed to complete a job

The main issues the majority of lenders have had with providing mortgages for freelancers is a lack of stability these type of roles can offer.

Lenders want to see an established & reliable income, in order to gauge what they are comfortable lending.

In general the majority of lenders are happy to provide mortgages to a self-employed person if they can demonstrate that they have been trading for over three years & also two years of accounts or self-assessment tax returns.

However there are several other factors that will help you going about securing your first mortgage as a freelancer.

Speak to a mortgage broker

The first piece of advice that you will hear from anyone when you ask about a mortgage is to find a broker you trust. Set up a consultation and they will work almost as a go between yourself & the lender.

By looking over your finances and asking a set of relevant questions they can help establish who the best lender is to cater your specific needs.

This is something that is even more crucial when dealing with self-employment. Our contractor mortgage specialists offer a quick & clear service for anyone, ranging from first time buyers to those that are looking into remortgaging.

Prepare to be scrutinised

Ensure that you know your finances inside & out as lenders will need even more assurances, to give them peace of mind in relation to the fact you are self-employed.

You will be required to explain such things as changes in your earnings. As previously mentioned lenders will ask for two years of accounts from freelancers applying for a mortgage, and you will need to be aware that they may take an average of both years if you have a fluctuating wage, which will have an effect on how much they will be willing to give you.

Focus on improving your credit rating

One of the first things a lender will check make on you when requesting a mortgage is to have a look at your credit score. Your credit score summarises your borrowing & repayment history.

A higher score is desirable & indicates that you are reliable when it comes to making your repayments. This is absolutely vital when it comes to securing a freelance mortgage.

It’s advisable to wait until your credit rating is strong, before you go to a lender. In order to check your credit score, there are a list of credit reference agencies analyse your credit history including Noddle & Experian.

Save Save Save

Lenders will tend to look more favourably should you be able to showcase a significant deposit. Not only does this help the lender get over issues with the volatility of freelance work but it can also help lower how much you will be required to pay each month.

Obviously saving is important for your deposit, but people fail to factor in the fact how much the likes of stamp duty and solicitor fees will set you back.

It’s understandable how some people forget these outgoings in the grand scheme of things, but a significant financial cushion is advisable to help deal with any unforeseen expenses.

Get In Touch

If you are a freelancer wondering if you can get a mortgage, get in contact with Super Contractors today. We help freelancers secure mortgages all over the UK.

Our expert mortgage advisers are trained to understand the challenges of working for yourself, and we only work with self-employment friendly lenders.

We have access to many more mortgage products than an individual lender & we’re here to fight your corner!

_ _ _ _ _ _ _ _ _ _

Your home may be repossessed if you do not keep up repayments on your mortgage.

This firm charges a fee of up to £395 for mortgage advice. The fee will depend on your circumstances and will be discussed and agreed with you at the earliest opportunity.

Lifetime Finance Group Limited trading as Super Contractors is an appointed representative of PRIMIS Mortgage Network, a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct Authority.

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