Mortgages for the self employed


Nov 03, 2017


Personal Finance

If you’re self employed it’s not always easy to get a mortgage. Convincing mortgage lenders that you’ll be able to meet all your future repayment commitments can be a tricky and daunting task. Nevertheless, the self employed workforce in the UK is large, and it’s growing – now constituting 15% of the labour market according to the Office for National Statistics. Due to this changing employment landscape, mortgage lenders are beginning to recognise the needs of the self employed. Borrowing criteria are altering – including the requirements for evidence of work history – and according to UK Finance (formerly the Council of Mortgage Lenders) this led to an 11% rise in the number of mortgages taken out by the self employed in 2016.

For years mortgage lenders have requested print copies of a form called SA302 from HMRC, to verify an applicant’s income. The SA302 details your tax calculations and your tax year overview, to give a clear picture of your full income. However, on 4 September 2017 HMRC stopped issuing these paper documents, and instead mortgage lenders now have to rely on a self-serve copy printed from the HMRC online account or the commercial software used to file your self assessment tax return.

The advantage of this new system is that if you’ve filed a self assessment return online, you’ll be able to print a copy of your tax calculation and/or the Tax Year Overview when it suits you, rather than calling HMRC and waiting up to two weeks to receive a copy. The initial disadvantage was that not all mortgage lenders were accepting these new self-serve copies. However HMRC have now issued a list of lenders who will accept them and the good news is that most major lenders are included.

Before HMRC removed the print copy of the SA302, some lenders did not feel that these self-serve tax calculations were sufficient evidence of a self employed worker’s income to gauge their borrowing power. Now, although mortgage providers haven’t become any more lenient, they are being more flexible towards the self employed.

If you have any questions about how to verify your income in order to apply for a mortgage, please contact the team and we’ll happily help you.