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In the main, your income will be treated as per whether you are a Sole Trader or a Limited Company Director on any application for a mortgage when self employed as a Freelancer or Contractor.

However, for some applicants your mortgage may be assessed differently.

If you are a Freelancer but you are primarily working for one organisation for which you have a long term contract, e.g. you are a freelance writer but are contracted to work with just one publication, then a lender may take the value of that contract as your income. This is ordinarily if the contract has been running for at least 6 months and has more than 3 months to run and you have a long uninterrupted history of similar contracts.

For those that are contracted on a daily rate, lenders may use a multiplication of that day rate figure to deduce your income, e.g (daily rate x 5) x 46 = annual income.  Again, this is very much assessed on a case by case basis and will depend on your history of similar contracts but it may work out beneficial for some.

If you are on a fixed term contract and looking to arrange a mortgage, then again, there may be additional avenues rather than the traditional ‘Net Profit’ figure to pursue. If a lender is comfortable that the fixed term contract is sustainable and likely to continue in to the future, then they may assess your income differently which could result in a higher mortgage loan being considered.

In all cases,  it is important to act with full transparency and ensure your mortgage adviser understands how your income is earned rather than just what the headline figure is. This will allow them to give the best mortgage advice for those who are Freelancing or Contracting and want to pursue their dream of home ownership.

For more information, check out Mortgages for the Self-Employed.

Mortgage When Self Employed

For more information on mortgage when self employed, get in touch.

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