Success Stories for Self Employed Mortgages


Damian Youell

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Sole Trader 

A sole trader is an individual who carries on business in his name without the aid of partners.

Types of Sole Traders in the UK:

  • Self-employed individuals or partnerships
  • Individuals with their businesses but not registered as self-employed.
  • Companies limited by guarantee that do not trade under their names.

The term’ sole trader’ can be used interchangeably with’ self-employed person’ and ‘unincorporated company’.


Can sole traders get a mortgage?

Yes, a sole trader in the UK can get a mortgage for buying a property, and many specialist lenders can help with suitable mortgage deals. The first thing to do is check if you have enough money available or not. If your salary is low, it’s better to look at other options than getting a bank loan. You may be able to borrow against any equity you might have in your home by using an equity release plan. Instead of borrowing all your savings, you could use some of them to pay off your house more quickly. Getting a self-employed mortgage is a challenging task. It is always better to contact a mortgage broker who can help you to get a better deal from a specialist lender. 


How long do you need to be a sole trader before getting a mortgage?

In most conditions, the minimum requirement to work as a sole trader for getting the commercial mortgage is 12 months, but a specialist lender could start your application before this. Many sole trader mortgage lenders will look for proven, well-documented trading history and annual income. 


 What documents will I need for a sole trader mortgage?

When applying for a mortgage, you must submit certain documents such as proof of identity, address, and employment. In addition, you will need to show evidence of sufficient funds to cover the amount borrowed. 

If you want to buy a new build property, you must prove that you have saved up enough cash to fund the deposit. You will need to produce bank statements showing that you have paid into a saving account over time. These accounts include things like current accounts, ISAs and pensions.

You will need to demonstrate that you have made regular repayments towards the outstanding balance for existing properties. Most lenders will accept monthly payments via direct debit. They will also ask for copies of utility bills and council tax receipts.


How are sole trader mortgages assessed?

Lenders assess whether you meet the criteria set down by law when they decide whether or not to offer you a deal. Some factors are considered; age, credit rating, occupation, previous earnings and personal circumstances. Lenders usually consider these factors when deciding whether or not to lend you money.


Are sole trader mortgages expensive?

It depends on where you live. Mortgage costs vary depending on location because different areas attract different borrowers. So, if you live in London, you will probably find yourself paying higher interest rates than someone living in Manchester.


Mortgage Rates for Sole Traders

There are several ways to compare mortgage rates for sole traders. One way is to search online for quotes from various providers. Another option is to visit one of the major high street banks. There are plenty of websites offering comparison tools. A third method is to speak directly to a broker. Brokers often specialise in helping sole traders secure finance.


How Find the right mortgage lender?

The best place to start looking for a mortgage is through a local branch office. Banks tend to provide their products, making it easier for customers to understand exactly what they are signing up for. When choosing a provider, think about who has been recommended to you by friends or family members. Also, consider the reputation of the company. Is it well known within its industry? Do people trust it? Does it seem trustworthy? It is always best to contact a mortgage broker before starting your application.


Is it possible to get a mortgage without having a guarantor?

A guarantor is somebody who guarantees another person’s debt. Usually, a guarantor provides collateral if they fail to fulfil their obligations under the agreement. As a result, a guarantor takes responsibility for the borrower’s debts.

However, sometimes a guarantor isn’t necessary. Sometimes, even though a guarantor is needed, the guarantor doesn’t guarantee anything.


Next Steps

Getting a joint mortgage with friends or siblings is a complicated process that requires a great deal of knowledge and expertise. Seeking professional support could save you time and money in the long term. At Needingadvice.co.uk Ltd, we are always here to help you and your family with our best advice and support. So get in touch with us today to streamline your mortgage process.


Some Additional FAQs for sole trader mortgages

Can you get a mortgage as a sole trader?

Yes! You can apply for a loan as a sole trader, provided you meet specific requirements. The essential requirement is that you must be able to prove that you have sufficient income. 


What do I need to qualify for a mortgage?

You should be over 18 years old and earn more than £25k per year. Your annual gross salary needs to exceed £30k before tax.


How many years do I have to be self-employed to get a mortgage?

You only need to be self-employed for two years to qualify for a mortgage. However, some lenders may require three years.


Can trading income be used for a mortgage?

No. Trading income cannot be included when calculating how much you make each month. This means that any profits made during the course of the year won’t count towards meeting the minimum monthly repayments.


Is it hard for a self-employed person to get a mortgage?

It’s not impossible, but there are things you’ll need to consider. For example, if you’re planning on using an overdraft, you might want to get a personal loan instead.


Can I get a mortgage with one year of self-employment?

Yes, however, you’ll probably pay higher interest rates because of the shorter period. If you don’t mind taking out a long-term loan, you could try to negotiate lower interest rates.


How many years do you have to be self-employed to get a mortgage?

If you’ve been working full-time for less than five years, you’ll likely struggle to secure a home finance product. To qualify for a mortgage, you’ll usually need to work for at least six months after being offered one.


Can you buy a house with one year of taxes?

This depends entirely upon where you live. Some areas allow you to pay off your property within 12 months, while others expect you to wait until next April. It also depends on whether you own your business outright or through shares.


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

Joint mortgages aren’t available for people who are both self-employed. They are designed for couples who share responsibilities such as childcare duties.


What proof of income is needed for a mortgage?

The amount of evidence you provide varies from lender to lender. Most lenders ask for bank statements showing regular deposits. Other lenders may request copies of payslips or other documentation which shows your earnings.


How do day traders get a mortgage?

Day traders often use their trading accounts to show they have enough income to cover their mortgage payments. Alternatively, they may offer up their company’s profit figures.


How do day traders prove income?

Most lenders prefer to see bank statements rather than trades records. An excellent way to demonstrate your ability to generate consistent cash flow is by providing them with a report detailing all transactions in your account since January last year.


Can I get business loans for sole traders with bad credit?

Yes, you can get business loans for sole traders with bad credit reports but you may need to provide additional information to the mortgage provider. As well as proving your income, you’ll need to provide details about your business plan, including what kind of products or services you intend to sell. You’ll also need to explain why you can’t find another source of funding. Some street banks may not approve your mortgage application as a sole trader with bad credit but If you are interested, you can contact a known expert broker who can help you as a self-employed borrower.

Read more about self-employed & similar commercial mortgages on our website blog section.


Is it easy to get a home loan as a sole trader?

Getting a home loan as a sole trader is not easy because of no fixed monthly income of a sole trader. Many street banks won’t approve your home loan application as a sole trader because of your lack of regular income. Lenders will ask for tour evidence of income that you can show in different forms. To understand the income proof requirements and other necessary details for getting a home loan, you can contact a specialist mortgage broker.


Can I get a mortgage if I am self-employed?

Yes, you can get a mortgage if you are on self-employed income but you may need to provide some documents to prove your annual income figure. Your income should be proven using either:

  • Bank statements showing regular deposits;
  • Payslips or other documentation showing your earnings;
  • A report detailing all transactions in the account since January last year;
  • Other sources of income (e.g., rental properties);
  • Business plans, including what kind of product or service you intend to sell.