Mortgage with one years accounts
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Mortgage with one years accounts
There are a lot of perks that come with being self-employed. You immediately gain the freedom to choose your clients and projects, the flexibility to schedule your own work, and the joy that comes with being your own boss. You don’t have to answer to anyone, and you’re not obligated to operate in a specific way. When it comes to your career, you are in the driving seat. However, there is a downside, and that’s to do with getting a mortgage.
Traditional mortgage lenders make it slightly more difficult for self-employed professionals to secure a mortgage, especially if you haven’t been self-employed for very long. Usually, mortgage lenders want to see 2 or 3 years’ worth of accounts, which they use to assess your income and ensure affordability. But, that doesn’t mean a mortgage is out of reach if you don’t have that.
At Everest Mortgages, we can help you to access self-employed mortgages for people with limited accounts. Designed for newly self-employed workers, these mortgages put a property purchase within each, even if you haven’t been your own boss for long.
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What is a self-employed mortgage?
Mortgages fall into different categories; there’s 100% mortgages, low deposit mortgages and fixed rate mortgages, all of which are designed with employed applicants in mind. As a self-employed professional, you can still access these different mortgages, but you’ll need to take the self-employed mortgage route.
A self-employed mortgage is specifically designed for people who run their own business, freelance or work as contractors. They work in a similar way to standard mortgages, but lenders won’t approve you until they’ve seen proof of earnings and stability.
This information can be given in the form of filed accounts from an accountant, SA302s from HMRC showing tax calculations and bank statements to verify your income. You also have the option to provide a reference or certificate from your accountant. Some lenders will even consider ongoing contracts or regular invoices to demonstrate your future income potential.
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1 year accounts self-employed mortgages are slightly different
If you’re newly self-employed or you’ve only been trading for a short time, you might not be eligible for a standard self-employed mortgage. Simply, many lenders want 2 or 3 years’ worth of trading as proof of your income, which you won’t have. Luckily, self-employed mortgages for people with only 1 year of accounts do exist. These mortgages can help you get onto the property ladder or move home sooner, rather than waiting for a few years to pass before you buy.
Lenders take the following into account:
- Your most recent accounts and income, to see how profitable you’ve been over the last year.
- Supporting evidence, such as a reference from your accountant to confirm your financial standing.
- Personal affordability checks, including looking into your income and outgoings, to ensure mortgage payments are within your budget.
- Your credit history, debts and any existing financial commitments.
- Some lenders may also request additional documents, such as bank statements or proof of upcoming contracts, to verify that your earnings are ongoing.
As these mortgages involve slightly more risk for lenders and it’s harder for them to verify your future earnings, interest rates may be higher than for standard self-employed mortgages.
Who are these self-employed mortgages for?
If you haven’t been your own boss for very long, a self-employed mortgage aimed at people with only 1 year of accounts to show could be just what you’re looking for. They’re ideal if:
- You’re a newly self-employed professional with strong initial earnings.
- You’re a freelancer, sole trader or contractor who recently transitioned from employment.
- You’re a small business owner who doesn’t have multiple years’ of accounts behind you yet.
- You’re looking to buy or remortgage, and you don’t want to wait to build your finances over 2 or 3 years.
At Everest Mortgages, we help self-employed applicants through the mortgage finding and applying process, making sure you provide the right proof of income so your application has the best chance of being approved.
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Self-employed mortgages: 1 year accounts vs. 3 year accounts
Though you might be faced with slightly higher interest rates and fewer lenders to choose from, there are a surprising number of benefits that come with getting a mortgage specifically designed for those with only 1 year of accounts.
- You can get quick access to funding and aren’t delayed in buying a property, without having to spend years waiting to build up your finances.
- These mortgages are ideal for new businesses or recently self-employed individuals, who might only have only been working for a matter of months.
- Lenders understand the uniqueness of self-employed earnings, meaning having varying income streams doesn’t automatically disqualify you.
- You can get on the property ladder or remortgage sooner, without having to wait to have a few years of self-employment in the bank.
- You’ll have access to specialist lenders who understand self-employed income structures.
Are there any downsides?
The advantages speak for themselves, but there are a handful of downsides to consider. For example, interest rates might be slightly higher due to your limited financial history. You will also likely find that some lenders will require a larger deposit to mitigate the risk of lending to you. This is why it’s helpful if you can provide evidence of consistent or rising income.
With Everest Mortgages fighting your corner and guiding you along the self-employed mortgage path, you save time, reduce stress and increase your chances of approval, even with a limited financial history.
Frequently asked questions
Can I get a mortgage with only a 1 year of accounts?
Yes, you don’t always need multiple years’ worth of accounts to be approved for a mortgage, but it does help. Specialist lenders offer mortgages based on a single year of accounts, which is ideal for newly self-employed applicants.
Will interest rates be higher than standard mortgages?
Yes, that’s likely to be the case. Lenders tend to consider limited accounts riskier than multiple years, so rates may be slightly higher.
How much deposit do self-employed mortgage applicants need?
Deposit requirements vary from one lender to the next, but a larger deposit will usually improve your chances of approval and can reduce your interest rate.
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