Joint Mortgages when One Applicant is Self-Employed

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Joint Mortgage When One Self Employed 

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

It does not matter on your type of employment you are considered, if you are a person who wants to buy, there is no reason you cannot get a joint mortgage. You can still access joint mortgages even when one is a Self-Employed mortgage applicant.

The difference will be in how you prove your income. It makes more sense for the applicant under the PAYE salary to hold the first name on the mortgage for the sake of affordability checks. A joint mortgage will mean everyone’s name on the mortgage is liable to make repayments.

The amount that you both pay each month, how much of the property you own at the end of the mortgage and how you share the equity will be up to you to decide for yourselves. If you cannot reach an agreement and sell the property, then the profits will be split amongst the participants for the mortgage.

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

If you are going in for a joint mortgage, then all of the incomes of applicants involved will be combined. Typically, lenders will allow you to borrow four to five times the amount of your joint incomes. This will be subject to a credit check and a good credit score rating.

Lenders take into account your income, outgoings and your credit report when deciding how much you can borrow so it is important to have all three organised and showing that you can handle borrowing money. If you have bad credit then it can be worth trying to improve this by paying off any debts or credit cards you may have as well as waiting before applying for a mortgage.

If one applicant is Self-Employed then they will have to prove their income through SA302 tax calculations and overviews as well as providing details of any other sources of income such as retained profits.

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

You might be wondering if you need to provide additional documents if you are Self-Employed when it comes to your mortgage application and the answer is yes. The documents that you will need to provide will depend upon what type of Self-Employed category you fall under. 

Sole Trader

If you work alone, then you will need to declare your income through a self-assessment form for your tax to be calculated by HMRC. You will then need an SA302 outlining your total income and the tax you have paid. Some lenders require you to do this through a chartered accountant.

Partnership

If you are one half of a whole then you need to make sure you can show your half of the profits as well as showing any retained profits you have in the business. Make sure that you can provide at least a years’ worth of figures, but lenders typically ask for up to three years’ worth of figures.

Limited Company

You need to provide the director’s salary as well as any dividend payments received. Some lenders will not factor in retained profits so if this is something you want to be considered you may need a specialist lender.

Does a mortgage have to be in joint names?

You can go into a mortgage by yourself, a mortgage does not have to be in joint names. There are a range of schemes accessible and so many different mortgage lenders to offer options no matter the circumstance. Joint mortgages can allow you to gain more of a loan and access higher priced properties as opposed to buying alone.

Joint mortgages do come with risks too though such as financial liability even if you are not living in that property anymore. If you are involved in a joint mortgage and need to remove yourself then it is worth seeking advice as soon as you can to explore your options.

How can Bespoke Mortgage and Finance Centre Ltd help?

Here at Bespoke we have a range of mortgage experts ready to tailor advice to your current situation. Finding mortgages can be hard but Bespoke Mortgage Brokers can take the stress out of the search and help you with your mortgage application.

When you buy a property you want to make sure you have the right interest rate for you, especially when you are applying for a joint mortgage. There are some products out there that are not authorised and regulated by the Financial Conduct Authority but are accessible through the mortgage market too. 

Going in for a joint mortgage can be advantageous but it can have its downfalls too, it is important to understand mortgages and the commitment that you are making. Bespoke experts can talk you through the process as well as find the right lenders for you based on your current financial situation.

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