Can you get a joint mortgage if one applicant is self-employed?

Joint mortgages are a popular way of being able to buy property as married or unmarried couples or even as friends, by combining your incomes to obtain a larger mortgage. You can still obtain a joint mortgage even when one applicant is self-employed. You may find that having the PAYE mortgage applicant as the first named on the mortgage slightly advantageous due to being enrolled on the PAYE payroll as opposed to self-employed.

You will need to gather all of your documents to prove your income to lenders and ensure that you have all of your finances in order. Lenders sometimes can expect as much as three years’ worth of accounts to prove your income.

Lenders will look into both applicant’s credit scores and credit history to ensure that you are able to borrow reliably. You can still access joint mortgages with bad credit, but you may require a specialist lender.

How much can you borrow if one applicant is self-employed?

As you are choosing to apply for a joint mortgage, you will be able to combine both of your incomes in order to obtain a larger mortgage for a potential home. When it comes to assessing your income, lenders will check into all of the documents you provide so you need to ensure you have as much evidence of earnings as possible.

As someone who is self-employed, it would be advisable to speak to an accountant before going ahead with your mortgage application. It can be worth trying to earn more leading up to obtaining a mortgage as this way, you may be able to borrow more too.

There are also different tax implications depending upon what type of self-employed you are, and you can use these to your advantage when applying for a mortgage.

What documents do you need if one applicant is self-employed?

You will both need to provide the standard documents to prove your address and your identity. These include:

• Passport
• Driving License
• Utility bills
• Council tax bills
• Bank statements

If you are self-employed, you will also need to gather the documentation needed to prove your income. Lenders want to see that you can afford the repayments on your mortgage.

Sole Trader

As someone who works alone, you will need to make it your responsibility to ensure that your tax overviews and SA302 forms are to hand for your lender. Your tax will be calculated by HMRC and the lenders want to see this to outline your incomings and the tax you have paid. 

Partnership

If you are a partner in a company, then you will need to provide your share of the net profits as well as any dividends or retained profits that you have in the company. Some lenders will look at retained profits and not include it in the final calculation for your mortgage, so if you want this included you may need to seek a specialist lender.

Limited Company Director

It is becoming more and more popular to apply as a Limited Company Director as opposed to an individual due to the tax implications involved. You will need to show your lender your Director’s salary and any dividends and retained profits. Yet again, it is worth seeking a specialist lender if you want retained profits included in your mortgage calculation.

Contractors

If you are on a day rate, lenders will take this figure and multiply it out to give an estimated annual income. They will take into account any gaps into contracts so try to keep these to a minimum.

Does a mortgage have to be in joint names?

You can go into a mortgage alone and there is no one forcing you to go into a mortgage jointly. It is a big commitment to take on a joint mortgage as you will both be liable for the payments. Usually, if the property is sold and there are two names involved, then each will get a share of the equity. If you are in a joint mortgage and need help you should seek advice as soon as possible.

How can a Mortgage Broker at the Mortgage Advice Centre help me?

Here at the Mortgage Advice Centre, we have access to the  mortgage market meaning that we can access deals and mortgage rates that high street lenders are not going to offer. 

We will listen to your individual circumstance and advise accordingly making sure you understand the commitments you are making and helping you gather everything you need. As someone who is self-employed it is always worth looking for specialist lenders who cater towards you – get in touch with an expert Mortgage Broker today.

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