Getting a mortgage with 1 year’s accounts
Many mortgage lenders, when considering an application from someone who is self-employed or running their own business, will ask you to provide three years of accounts, often certified by an accountant. However, we know that this is not possible for everybody, with more people than ever becoming freelance, contractors or setting up their own limited companies. While it might not be an easy proposition, we have found that in certain circumstances it may be possible to get a mortgage with only one year’s trading figures.
Much will depend on the lender that you speak to, as approaches and attitudes can vary greatly from one to the next. In general, if they are open to the idea, a lender will ask for much more information than simply the accounts or your tax calculations. They may also ask for projections, assets and information about your employment before you started your own business. As a rule of thumb, you will need to have been working in a similar trade or profession prior to being self-employed and your previous income and employment history will play a part in the underwriting process.
If the application is to be successful, both you and the lender will need to consider the loan-to-value ratio of the mortgage against the property. As ever, providing a larger than average deposit or level of equity to invest in the property, and therefore requiring a smaller loan, will give you more leverage when it comes to the deal and help the lender to feel more comfortable with the risk of lending to you. Showing your commitment to the mortgage in this way might also mean you are able to get a better interest rate.