As leading Manchester mortgage brokers, we have the pleasure of dealing with those buying their first home, moving into somewhere bigger and even those purchasing investment properties. As such, we’re often the first to know about exciting new developments and properties on the market.
We all know that new homes are being built all across the UK, however there’s no disguising the fact that Manchester is a property hot spot and that potential homeowners are flocking from outside the area to call the city home. As such, the demand for property is quickly increasing and, as such, new build homes are being developed right across the area.
As such, we wanted to take a look at just three great new build home developments in Manchester, if only to showcase what’s available either now or in the near future.
1. Woodland Chase, Radliffe, Manchester
Being developed by Barratt Homes, Woodland Chase is located in Radliffe, Bury (just outside of Manchester, albeit a great place to live for those not fond of city living), and offers a fantastic range of two, three and four bedroom family homes. All of the properties within Woodland Chase have been designed with the needs and requirements of a modern family in mind and it’s safe to say that all offer a five-star build quality. Whether you’re looking to take advantage of the ‘help to buy scheme‘ or are simply looking to climb up the property ladder to house your growing family, Bury offers a fantastic range of facilities whilst being only a stones-throw away from central Manchester. With great links to the M60, M62 and A57 and the railway network, there’s fantastic connections for commuters making it the ideal location for anyone looking to move to the Manchester area without going right in the city centre.
With prices starting from just £176,995, you can be sure you’re getting a quality home from a well-respected and established housing developer in a great location! Contact Barratt Homes to book a viewing.
2. Ivy Grange, Salford, Greater Manchester
Less than 3 miles from the centre of Manchester is Ivy Grange, a new build development by Taylor Wimpey situated in Salford. The development boasts 45 3 and 4 bedroom homes in mews, semi-detached & detached styles. Whatever your preferred style of house, we’re confident that you’ll love what’s on offer at Ivy Grange and enjoy being just a few miles out of Manchester itself. Of course, Salford has been the home to a number of redevelopments in recent years, with the opening of Media City and the move of both the BBC and ITV to the city, offering you the opportunity to live in one of the UK’s most up and coming areas whilst still being on Manchester’s doorstep.
Houses at Ivy Grange start from just £188,995 and you can book a viewing through Taylor Wimpey here. We love what’s on offer in this development and if you’re looking for a new build home in Manchester, you could do far worse than taking a look at what’s still left. Be quick, however as these great homes won’t be on the market long!
3. Faraday Green, Miles Platting, Manchester
Faraday Green is a new build development in Manchester by Lovell Homes and is situated in East Manchester in Miles Platting. The development is at the heart of the re-development of East Manchester and is set to boast a wealth of new build homes perfect for families, couples and individuals alike. Faraday Green has people at its heart and sustainability at its admins. You’ll find Sportcity on the development’s doorstep whilst being just a few miles out of the centre of Manchester itself.
Whilst the development will take some years to fully complete, the plan is for more than 1,000 new build homes, perfect for anyone regardless of whether they’re first time buyers looking to get themselves onto the property ladder, a family looking to upsize or a retired couple looking to downsize. The concept of Faraday Green is to offer something for everyone in a close-knit, friendly community.
All homes are being designed to be more energy efficient alongside boasting newly landscaped parks, paths and waterways to encourage both walking and cycling by local residents.
Why not book a viewing of a show home through Lovell Homes today and see this exciting development for yourself?
Of course, this is only a handful of new build homes being developed in Manchester at the moment, however it’s fantastic to see such redevelopments of parts of the city and it’s safe to say that Manchester continues to establish itself as THE place to live in the North year on year!
Applying for a mortgage became a more complicated procedure last April following the introduction of the Mortgage Market Review. Let’s take a look at what Belgravia estate agent, Best Gapp think about gaining approval for a mortgage…
Despite lenders doing their best to publicise this strict set of rules, many mortgage applicants are unaware of the hoops they will be forced to jump through when sourcing property finance.
The MMR aims to ensure that borrowers can afford to make their monthly mortgage repayments. It was introduced to stop banks recklessly lending to those who simply can’t afford to keep up the repayments as was the case before the financial crisis in 2008.
As a result, lenders are now obliged to put your finances under a microscope leading to what some have described as three-hour interrogations by the mortgage company. One major change is that rather than just declaring your income, you actually have to prove it now.
Where once lenders might have been willing to take a gamble on you, this is no longer the case. However, there are actions you can take to improve your chances of obtaining one of the very attractive mortgage deals currently available on the high street.
Before you even think about applying for a mortgage or looking for properties, it’s worth making a start on the documentation you will have to show the mortgage lender.
If you have any outstanding debts it’s time you got a handle on them and early repayment will work in your favour with lenders. Take an in-depth look at your outgoings and work out where you can cut back even if it means going without a few luxuries for a while.
You are also more likely to be taken seriously if you can show that you’ll have money left over at the end of the month. This shows that you can take care of any unexpected bill and are more likely to be able to handle a possible interest rate rise.
The introduction of the MMR has resulted in a higher number of would-be borrowers being refused a home loan. But many unsuccessful mortgage applicants are still in the dark as to why they were turned down.
In a survey by Experian, a startling 15% of those turned down actually believed that mortgage rules had relaxed since MMR and 37% didn’t realise that lenders would be more inquisitive in finding out whether they could afford the repayments.
What is most surprising is that many people actually believe deposits have gone down in recent years. In fact, on average, buyers have to stump up 40% of the total property’s worth. Even on a house worth £150,000 that’s still £60,000! And, if the property you want is even a few million pounds, you’ll need a hefty deposit for sure if you want a mortgage.
When asked by Experian 25% of people felt that MMR had played a major role in their application for a mortgage being denied. Rather worryingly of those, 11% hadn’t actually bothered to find out why they had been rejected, leaving them at a significant disadvantage when it comes to qualifying in the future.
Ultimately, it comes down to being prepared and understanding exactly what the lenders are obliged to ask and the evidence you need to produce.
161,000 homeowners across the UK currently claim what is known as ‘Support For Mortgage Interest’ (SRI), a means tested benefit which those who are struggling financially can apply for to help ensure they don’t miss monthly mortgage repayments. In July, however, the rates will change due to an alteration to the rate used for calculations, potentially leaving thousands of homeowners unable to meet interest repayments.
Financial Assistance For Interest Payments
At this moment in time, those homeowners eligible to receive the benefit are able to apply for financial assistance with monthly payments of the interest on a mortgage of up to £200,000 based upon an interest rate of 3.63%. Next month, however, this drops to 3.12%. Whilst it might not seem like a large drop, a reduction of just over 0.5% can equate to hundreds of pounds over the course of a year.
Coming into effect on 6th July, an example reduction shown on a £100,000 mortgage taken out over 25 years would see a drop by £43 per month (from £303 to £260). To some, this means tested benefit ensures they don’t fall behind with mortgage interest repayments, however with the reduction even in the above example equating to more than £500 over a yearly period, it could well be the difference between a homeowner going through a period of temporary unemployment having to sell up or being able to remain the owner of their own home until they get back on their feet.
A Means Tested Benefit
SMI is a means tested benefit, available to those receiving income-based jobseekers allowance, employment and support allowance and pension credit and is aimed at covering the interest payments on a homeowners mortgage through difficult financial periods. SMI is not intended to cover repayments on the capital.
What is surprising is that this isn’t the first time in recent years that SMI has been cut, with a drop from 6.08% being seen back in 2010. At the time, this reduction was a significant decrease and it was reported that, as a result of it, many homeowners claiming the benefit were facing repossession.
A DWP Comment
A DWP spokeswoman has commented on the matter, stating, “Mortgage support is not designed to cover an individual’s entire mortgage interest payment, but instead offers a measure of support for some people to prevent repossessions.”
Search Mortgage Solution’s Comment
David Sharples, our Manchester based mortgage broker here at Search Mortgage Solutions commented on the announcement of the rate decrease, stating, “For those who may have experienced changed circumstances following the purchase of their own home some time ago, SMI is intended to help keep them in their own homes rather than being forced to sell up (or even worse have the home repossessed) and have to apply for either housing benefit or go into council housing. Whilst the rate is expected to fluctuate based upon the Bank of England base rate, such a drastic cut whilst that remains stable could force repossession for many, something which shouldn’t be happening. Whilst mortgage rates over a fixed term have dropped considerably in recent months, the average variable mortgage remains at 4.53%, somewhat higher than the maximum available from SMI.”
Since its introduction last April, the Mortgage Market Review (MMR) has been getting would-be homeowners into a bit of a muddle. Many are unsure what the new rules actually mean for them and their ability to get a mortgage. Its inception comes down to one thing: for years banks lent money to those who simply didn’t have the means to pay it back or in the event of an interest rate hike find themselves financially struggling. While it’s not true to say that getting a mortgage was ever easy, now borrowers are finding themselves having to jump through hoops just to be in with a chance. So, one year on what changes have been made to the mortgage process? Let’s find out from West End estate agent, LDG…
Tighter Attention To Your Earnings
In the first place, tighter attention is paid to proving what you actually earn. Before, borrowers only had to declare their income and not actually provide evidence. These were called ‘self cert loans’ and often led to people exaggerating their monthly pay packets. Others simply got interest only loans; but this also caused problems within the market. This type of loan was popular as the repayments were lower; but many struggled to pay off the balance at the end of the loan. These options are no longer available thanks to MMR, therefore forcing mortgage providers to be far more stringent and investigate customers properly who they lend to.
A Three Hour Interview
The investigation takes the form of a three hour interview during which your finances will be put under the microscope. It’s not just how much you earn that is up for scrutiny; but your outgoings as well. You’ll even be asked how much money you have left over at the end of the month. In a survey conducted by Experian of those who had been rejected for a mortgage, 13% did not know how much money they had to play with at the end of the month.
A Look At Deposits
However, it’s not just your financial situation that you have to worry about. Deposits these days are much higher than they were 10 years ago. Typically you will have to find 40% of the total cost of a house, meaning that if a house costs £150,000 your deposit would be £60,000. This change is yet another major factor in locking people out of the market – but interestingly 23% of people actually believed deposits have gone down and 62% had no idea they would actually require bigger deposits than before.
It should come as no surprise then that at least 25% of those surveyed claimed that MMR had played a significant role in their inability to qualify for mortgage but; in addition, 11% had no idea why they had been turned down in the first place. Should you be refused a mortgage it’s crucial to actually ask the lender why you have been turned down and how you can improve your chances in the future.
The point is that mortgage lenders are no longer relaxed about who they lend to. You can increase your chances by early payment of outstanding debt, closely monitoring your expenditure and finding ways to cut back wherever possible. Always make sure you have money left over at the end of the month should disaster strike and you have to get your car fixed or pay to repair a broken boiler. Keeping track of all these things will take time. Ultimately, the more information you can provide and the more you can give the lender a clear picture of your finances, the more likely they will view your application favourably; thus taking you down the road to successful homeownership.
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Manchester – A City For First Time Buyers
If you’re a first time buyer looking to purchase your first home in Manchester; you’re not alone! A recent report by Countrywide, has suggested that Manchester is ‘a city for first time buyers’ and that, outside of London, a higher proportion of lending goes to first time buyers than anywhere else in the country, with more than a third meeting this criteria. As Manchester mortgage brokers, in addition to having launched offices in Liverpool, Bristol, Leeds, London and Birmingham, our head office remains up North and, as such, this report caught our attention. To us, it simply backs up that Manchester is arguably the best city in the UK to live in and it’s clear that first-time buyers think that way too. As such, we wanted to look at some of the findings in a little more depth, starting with Countrywide’s great area infographic:
50% Of Mortgage Lending In Manchester Goes To First Time Buyers
The report revealed that a staggering 50% of mortgage lending in the Manchester area is going to first time buyers and that once you take cash buyers into account, this equates to 35% of all houses. Of course, the fact that we’ve started to see the housing market recover in recent years has only helped matters and with the current rock bottom mortgage rates, we could well expect to see this figure rise even further over the coming 12 months.
Where In Manchester Are They Buying
When you look at the percentages of mortgages awarded to first time buyers in Manchester, it’s easy to see where the property hot spots in the area are, with, as you’d expect, Salford Quays and Fallowfield high up the list:
It certainly looks to be the postcodes which surround the city centre which are most popular with first time buyers, with a far lower percentage opting to buy in the more affluent areas of South Manchester, with those purchasing in Sale, Didsbury and Chorlton putting down, on average, a lager deposit and paying around £157,000. In comparison, the majority of first time buyers are spending in the region of £117,000.
One thing is for certain and that is that Manchester is a property hot spot for first time buyers. With a fantastic offering of career choices in the city alongside great nightlife, shopping, transport links and general ‘reputation,’ it’s easy to see why and, in our opinion, it’s not something which is going to change any time soon, especially with a wealth of new builds in areas such as Salford and the continuation of the Help to Buy scheme into the next few years.
At Search Mortgage Solutions, we not only offer domestic mortgage advice but are also proud specialists in buy-to-let mortgages. As such, we’ve put together 5 top tips to buy-to-let for property investors. Whether you’re a current investor or are considering your options as to whether you may get better returns from property than savings accounts, take a look and let us know if you feel we’ve missed any!
1. Do Your Research
When considering buy-to-let purchases, it’s absolutely vital that you take the time to conduct thorough research into the market. It’s important that you’re fully aware of both the risks and the rewards and the steps you can take to minimise risk and maximise success. Whilst for many, property investment can bring great returns, it’s not your only option and it’s important that you do carry out the research to be sure you’re making the right decisions.
In many cases, in order to see the best returns, you’ll need to renovate a property. Are you prepared to do that? Buy a house which needs work at the lowest possible price then do it up? For many, it’s the whole reason they go into it but for others, it needs careful consideration. You’ll not only be investing money but most often time as well!
2. Consider Your Area Carefully
Don’t just rush out and look solely in your local area at potential investment properties. It’s important that you consider the area where you buy carefully and understand the market in that region. A promising area doesn’t necessarily mean the cheapest or even the most expensive, but an area where people want to live and where has been identified as somewhere with great appeal for buyers. This may be in your local area or it may be further afield!
It’s important that you match your funds to an area where you’re likely to get the very best out of it.
3. Do The Sums!
As part of your decision making process, sit down and do the sums on any potential properties! Consider the cost of the property alongside the potential rent you can generate each month (or year) against the cost of the mortgage. Do the sums add up? Our mortgage calculator can help you work out potential mortgage costs!
At this stage, we strongly suggest you speak with a specialist mortgage broker to get an idea as to potential interest rates and be able to make a decision as to whether an area is likely to generate a return for you.
4. Consider Who Your Ideal Tenant Is
It’s important to identify your ideal tenant and to consider whether you want to rent to students, families or any other groups. As an example, renting to students may well bring in additional rent, however it can, in many cases mean more admin due to rent being paid by individuals as opposed to as a group.
In many cases, this will dictate how you renovate the property and bring in additional considerations. If you’re renting to students, you’ll usually need to offer the property semi-furnished.
All in all, by knowing your ideal tenant, you can make your property more attractive to them from day one, encouraging an easy let and a tenant who stays for longer.
5. Be Prepared To Haggle On The Price Of The Property
When you’re buying as an investment, you generally have the same bargaining power as a first time buyer does. There’s no chain and, in many cases, you’re able to complete far quicker than a home mover ever could and represent a far lower risk of the sale falling through. As such, this often means you’re able to negotiate a great drop in the price of the property. Again, it’s important that you’re familiar with the market here as this will give you an advantage, being able to strike during times when properties are taking longer to sell and negotiating a better price.
When it comes to buying to let, every drop essentially contributes to a better return on your investment and again it can help to try and find out why a property is being sold. If it’s a landlord looking to cash in on his or her assets, again you may be able to haggle in return for a quick sale.
At the end of the day, buy to let investments can bring with them some great rewards however also carry some level of risk. This, however, can be reduced by knowing the market and having the confidence to go ahead and invest not only time but also money!
The reality is that if you’re unfortunate enough to have a less than ideal credit score, sometimes by even just a few points, you could struggle to be approved for a mortgage. With more and more would-be first time buyers looking to get out of the rental market and onto the property ladder, young people are frantically looking at ways to improve their credit scores to make themselves financially more attractive to lenders. The questions which are often asked, however, generally revolve around the best ways to boost your credit score, even if you’re almost entirely debt free, as some first time buyers are, of course! Having a poor credit score doesn’t always mean you’ve defaulted on payments and can, in many cases, especially for younger buyers, mean they’ve simply not built up any form of credit history to be considered against or even that they’re not on the electoral roll! As such, here’s our top 5 tips for boosting your credit score ahead of a mortgage application.
1. Check Your Current Credit Score & Report
How can you even begin to boost your credit score if you don’t know where it’s at at the moment? The very best starting point for any individual or couple considering applying for a mortgage and even slightly concerned about their credit score is to request a copy of their current credit report from the likes of Experian or Equifax, both of whom offer a free service.
Once you know your score, you can put in the effort to do something about it if it’s less than adequate. At the end of the day, if you’re seeing what lenders are seeing on your credit report, you can take the steps to ensure you rectify any issues and build up a history of credit if your report is lacking.
2. Register To Vote
One of the common things which young people ‘forget’ to do is register to vote and get themselves on the electoral roll. Lenders use this as a fraud prevention technique to double check that you really do live where you say you live. It only takes a few moments to register to vote if you’re not already on the electoral roll and it can make a big difference to your overall credit score. You can sign up online at About My Vote.
3. Ensure You Don’t Miss Payments
Missed or late payments are one of the worst things for bringing down your credit score, whilst making payments in full and on time are one of the best ways to take it up! To lenders, missed or even late payments suggests you’re unable to manage your personal finances efficiently and, as such, can use this as a bad mark against you. The best way to demonstrate your ability to manage your money is by making payments on time and by sticking to your credit limit. If for some reason you need to go over your agreed credit limit (perhaps for a large purchase), talk to your bank or credit card provider as in many instances, they’ll negotiate your limit. It’s far better to pre-arrange a larger limit than to go exceed your current one.
If at all possible, make larger than the minimum repayments, further showcasing that you’re able to not only meet but exceed these and manage your money efficiently to pay debts off ahead of time. Missed or late payments will generally stay on your credit report for at least six years, however if there’s a specific reason for poor money management (perhaps you were ill or going through a divorce, as an example), you can request that a ‘Notice Of Correction’ is added.
4. If You’ve No Credit History, Apply For Some
For many young people, the problems lie in the fact that they’ve never had credit to build up a history. If you’ve never had a credit card, get one! Despite the fact that you’ll likely only be approved for a small limit, it doesn’t matter. Simply buy small items on the credit card and pay off by the end of the month. It’s demonstrating that you’re able to manage your money by borrowing on a credit card and paying off in full. Don’t be tempted to apply for too many cards at once, however as this can have a negative effect. You simply need to demonstrate that, over time, you’re able to borrow and repay.
5. Close Unused Credit Accounts
On the other hand, some people will find they’ve got a number of credit cards or credit accounts which they no longer use. If this is you, close those which you don’t need. Even if you’re not using cards, some lenders will look at the maximum amount of credit available to you at any one time. As such, unused cards can negatively affect your overall attractiveness to lenders. It’s always important to keep a few credit accounts open to showcase your money management, however if you’ve not used a card in a good few months, get it closed down!
All in all, in many instances, improving your credit score is simply common sense. By following a few simple tips and guidelines, over time you can significantly increase your overall credit score and if you keep monitoring through credit reports, you’ll see this for yourself and have the confidence to apply for a mortgage and become the owner of your own home!
According to data which has just been published by Halifax, a fifth of would-be first time buyers believe that securing a mortgage would be impossible and are, instead, renting. The data, released by Halifax from the ‘Generation Rent’ report, showcases a strong difference between generations, with just 12% of the parents of those asked giving the same statement.
Back in 2012, both would-be first time buyers and their parents were far more pessimistic about the potential to secure a mortgage, with 21% of parents and 29% of their children believing getting approved for a mortgage was virtually impossible.
The report contained data from interviews with more than 40,000 20 – 45 year olds over a five year period and more than 4,000 parents over the past four years, both showcasing the above as well as an earlier release suggesting that would-be first time buyers have lost confidence as a result of rising property prices and tighter criteria for getting approval on a mortgage. At this moment, 43% of those interviewed are saving to buy their first home, down 6% from 49%.
Looking deeper into the results of the study shows that whilst the peak for first time buyer approvals stood at 402,800 in 2006 and the trough at 192,300 in 2008, this number is back on the rise up to 311,500 in 2014.
David Sharples, mortgage broker here at Search Mortgage Solutions has given his comment on the data released by Halifax, stating, “The positive which we can take from the recent Generation Rent report certainly suggests that first time buyers are gaining confidence in their ability to secure a mortgage, with a further 9% believing it’s possible than three years ago. For those on the edge and unsure as to whether or not they’ll be able to realise their dream of owning their own home in the coming years, it’s important to remember that so long as you have a strong credit score, can prove sufficient income and low levels of debt, securing a mortgage is by no means impossible. The likes of the Help To Buy Scheme are meaning more first time buyers can afford to buy with just a 5% deposit and the forthcoming introduction of the Help To Buy ISA will further offer an incentive to those would-be home owners saving hard. The bottom line is that things are looking up and, with mortgage rates at an all time low, it makes sense for saving hard to be at the top of the agenda for many young people, finally breaking out of the vicious circle of renting.”
April saw the largest rise in mortgage approvals since 2009, it has been confirmed by the Bank of England, whose figures have shown over 68,000 approvals throughout the month. This, of course, comes as a result of the recent record-low mortgage rates fuelled by the on-going price war which is being seen between lenders in the market.
This is the first time in six years that we’ve seen this many mortgage approvals and, if nothing else, it gives confidence that the market is well and truly picking back up. Not since 2009 have we seen so many approvals in a single month, suggesting that buyers have regained the confidence to commit to a house purchase as well as lenders being in a position to lend to a greater number of individuals.
Statistics released on Tuesday show that a total of 68,076 mortgages were approved in April 2015 which equated to 6,100 more approvals than in March, showcasing a growth of 9.9%.
Howard Archer, of IHS Global Insight has stated to The Guardian that this new data, “reinforces our belief that housing market activity is now on the up”. He said he had recently lifted his forecast for UK house price growth in 2015 to 6% from 5%, and added: “There looks to be a very real possibility that it will have to be raised further. This is partly due to the increased upward impact on prices coming from a lack of properties on the market. We also suspect that housing market activity will continue to improve … following the decisive general election result.”
David Sharples, mortgage broker here at Search Mortgage Solutions has commented on the data which was released, suggesting that, “The Bank of England stats show perfectly the confidence which people now have in purchasing property. You only need to walk down any street or look in the window of an estate agents and the number of ‘sold’ signs backs this up as well. With families gifting deposits to first time buyers in many cases as well as the help to buy scheme really starting to kick in and take effect, it’s a promising time which reflects the overall housing market confidence. Of course, we mustn’t forget the low mortgage rates we’re seeing at the moment, further encouraging potential buyers to make the decision that now is the right time to buy.”
If you’re self employed, it’s no secret that getting a mortgage becomes a little more difficult than if you’re employed. At the end of the day, lenders want to ensure that you’re risk free and one of the uncertainties which comes with self employment, in many instances, is that lack of a guaranteed income. Especially if you’re running a small business as a sole trader, you can initially be seen a little more of a risk than someone who is employed and is guaranteed a pay cheque in the bank at the end of the month.
Before the ‘credit crunch’ back in 2007, those who were self employed were able to ‘self-certify’ and it was simply a case of telling the bank or lender how much they earned rather than proving income via bank statements. In many cases, applications were approved very quickly with few checks. Unfortunately, times have changed, despite the fact that self-cert mortgages were only ever intended for freelancers, contractors and business owners, as you would expect, the system became abused and many were greatly exaggerating their income to secure a bigger mortgage, seeing them dubbed as ‘liar mortgages.’
In short, self-cert mortgages are now banned and those who are self employed have to go down the same route as anyone else to secure a mortgage, albeit without a fixed regular income in many instanced.
As with all borrowers, however, it’s all about portraying yourself to lenders in the best light and showcasing that you’re not a risk and, as such, below you’ll find our top tips for getting a mortgage if you’re self employed.
Providing Evidence Of Your Income
The first tip for securing a mortgage is to know what you’ll be asked to provide. Many business owners, contractors and freelancers aren’t aware of exactly what they’ll need to secure a mortgage and, as such, aren’t prepared. The bottom line is that you need to prove your income and, as such, you’ll be generally expected to provide at least 2 years worth of accounts, sometimes 3. It’s important to understand that many lenders will expect accounts to be prepared by an accountant, often a chartered one. The key thing here is to make sure your accounts are up to date – lenders hate out of date accounts.
If you don’t have two years worth of accounts, it doesn’t always mean you’ll be refused a mortgage. Some lenders will accept one years worth if you’ve shown a great profit and regular work and it’s worth speaking with a specialist mortgage advisor who will be able to advise accordingly.
If you’re already a homeowner and are looking to remortgage, your lender may help! If you’ve got a strong track record of repayments and can showcase affordability, you may well find you’ll be approved. Again, always be sure to seek advice from a specialist advisor first.
Things which can help when it comes to proving affordability is to have a larger deposit and, just as is the case with any lender, the larger the deposit the better your chances of securing a mortgage. On the other hand, if you’re already a homeowner, having a decent amount of equity in your property can help.
Lastly, having a fantastic credit score and history is something else which is expected and which can help considerably. A poor credit history and self employment don’t go well together, unfortunately. If you’re wanting to know how to improve your credit score, the Totally Money guide here is a great read.
Consider Your Business Structure
A business will generally either be run as a sole trader, a partnership or as a private limited company and your structure can impact upon the approach taken to secure a mortgage.
A sole trader is a one man band and the businesses money is his money, they’re one and the same entity. A lender will look simply at the profits from the business (revenue minus expenses) however may request to see a SA302 form which shows how much tax you’ve paid and, as such, how much you’ve earned.
The difference with a partnership is that there’ll be two or more people involved, all of whom are eligible for a share of the profits. In this instance, it’s important to have correct accounts to show how much each partner has taken out and therefore see your annual income.
A limited company, on the other hand, is an entity in it’s own right and keeps your business and personal finances separate. Most directors will pay themselves a minimal salary and take the rest as dividends for taxation purposes. As such, if you’re running a limited company it’s important that lenders are taking into account both salary and dividends when assessing your income.
The Route To Take
At the end of the day, securing a mortgage if you’re self employed isn’t impossible and is, in theory, the same route as anyone else would need to take. The only difference is that it’s often harder for someone who is self employed to prove their income. So long as you have an up to date set of accounts, a great credit history and a sizeable deposit, there’s no reason why you’ll be seen as any less attractive than someone who is employed and by shopping around and finding the best lender based upon your individual circumstances, you’ll be able to find one who is prepared to work with you on your application.
Our top tip above all else is to take the time to speak with a mortgage broker who will be able to undertake much of the hard work for you and help you secure a mortgage and get one step closer to owning your dream home!
At Search Mortgage Solutions, we’re proud to offer specialist mortgage brokers in Manchester, Birmingham, Leeds, Liverpool, London and Bristol and encourage you to get in touch on 0800 756 7794 to discuss your needs and requirements as a self employed business owner looking to secure a mortgage.