Can I Get A Mortgage If I Am Freelance?

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Can I Get A Mortgage If I Am Freelance? (Part 1)

Paul talks to us about how the mortgage process works if you are freelance. Episode one of two, recorded in August 2024.

Can you get a mortgage as a freelancer? How hard is it?

You can normally get a mortgage in most situations now, to be honest. With the right preparation, it’s just as straightforward as most other mortgages. The approach is similar to how we look at a self-employed person. You’ve got good access to a wide range of lenders.

What types of mortgages can I get if I’m a freelancer?

Most lenders don’t really differentiate products for different types of customers, but some specialist lenders do.

If we’re able to go with one of the mainstream lenders, it’s going to be a standard product. A specialist lender might have a product specifically for self-employed people. That may have different benefits, be more expensive or perhaps more cost-effective.

It depends on the products available at the time, but nine times out of ten you’re going to have access to the same products as anybody else.

How do I know if I’m classed as a freelancer?

To be classed as a freelancer, and it’s likely to be that you do either piece work or you choose when you want to work. You probably pay your own tax.

You could be a freelancer in that you’re commissioned for a particular piece of work. You complete that, and you may or may not have the next project lined up.

You could be doing a specific project in a business, or perhaps you’re an artist, or you work on props or something like that. You might be commissioned to do a certain piece of art, and then you won’t have something until your next commission. You might have multiple commissions in a row. Typically you pick and choose when you work.

A freelancer normally pays their own tax and you are responsible for doing your own accounts – or you have an accountant do it.

How long do you have to be a freelancer before getting a mortgage?

Typically, you will need at least one year’s worth of self-employed books to get a mortgage.

How much can I borrow?

There are lenders that will go up to six times your income, with most income types. That obviously isn’t always possible, because we have to factor in things like your financial commitments, and whether you have children.

To get a real idea, you need a proper conversation with a mortgage broker to work out exactly how much you can borrow.

In terms of the deposit, 100% mortgage products are available. As a self-employed person you’re not necessarily excluded from them, but some do specify that you have to be employed. Some are quite specialist products that are only available to First Time Buyers.

How much deposit do I need for a mortgage as a freelancer?

It’s likely you will need at least a 5% deposit – but that needs to make sense alongside the affordability on the mortgage. You might need a bit more of a deposit if your income doesn’t stretch far, but that’s the same for anyone: employed, freelance or a company director.

How do lenders assess mortgages for freelancers? What documents do I need to have ready?

When lenders are looking at freelancers they will want to see accounts that have been submitted and what’s called a tax calculation. People will commonly know this document as the SA302. You also need the corresponding tax year overview.

You will need at least one year’s accounts, but most lenders will want two. You also need to be able to evidence that your income has been received. Most self-employed people might just show their last three months’ bank statements and we can see the income from that.

With freelance, depending when the work has been done and when you get paid for it, that might need to be over a longer period. You might need a few more bank statements to show that.

Can I get a mortgage if I’m employed with a part-time freelance income?

Yes, it works the same. You’ll be treated like you have a second job. If you’ve got one full-time job and you do some freelancing part-time, you need to have declared that for tax purposes.

If you have the documents we’ve just mentioned, your tax year overviews and calculations from your latest years, we can probably include that to help boost your affordability.

As a second job, some lenders will use all of that income to boost your affordability, while others might just use a certain amount of it.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

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Can I Get A Mortgage If I Am Freelance? (Part 2)

Paul continues the conversation on mortgages for freelancers. Episode two of two, recorded in August 2024.

Are mortgages for freelancers more expensive?

Generally, no, they’re not. I touched last time on the fact that freelancers qualify for most mortgage products. But sometimes people need a specialist product and if they’re classed as self-employed, as freelancers usually are, a lender might have a slightly different mortgage on offer. These can sometimes be a little bit more expensive.

It’s not usually a drastic amount more, but that might be the case for certain freelance applicants.

What do I need to do to apply for a mortgage as a freelancer?

Have your documents ready. The initial documents you need are your ID and proof of address. In addition to that, because you’re probably classed as self-employed, you would need your tax year calculations or SA302 documents for at least the latest year. Two years is better, and you will also need the corresponding tax year overviews.

We’ll ask for evidence of your deposit and usually at least three months’ bank statements showing some income. It might be that because you’re a freelancer, your pay frequency is not always very regular, and so you might need some more bank statements to show that.

The right thing you can do is have all that ready, speak to a broker, and we can advise you how much you can borrow and how much it’s going to cost you.

Can I get a Buy to Let mortgage as a freelancer?

Yes, there’s nothing to exclude you from that. Buy to Let mortgages are a little bit different, because some lenders require you to have a minimum income, while others don’t.

The way it’s actually assessed is on the rental income the property can generate, rather than your income as a freelancer. You won’t be penalised in any way for being a freelancer if you want a Buy to Let mortgage.

Can I get a mortgage as a freelancer if I have bad credit?

Obviously, it’s not really your role as a freelancer that’s going to impact you – it’s how bad the credit is. Get hold of a copy of your credit report and speak to a mortgage broker.

Along with the other documents we’ve mentioned, we’ll go through that report and assess what lenders are available for you, because it can be quite flexible. Depending on what the bad credit is – even if it’s happened within the last 12 months – you may still qualify for a mortgage.

Can I get a joint mortgage as a freelancer?

Yes, and you can still use the other person’s income with your income for affordability, as long as you’ve got your documents. If you’ve not been freelancing long enough, perhaps on a joint mortgage the other person’s income is enough to cover the mortgage. You can still go on it as a joint arrangement.

How can I boost my chances of getting a mortgage as a freelancer?

Prepare early. Don’t wait until you’ve seen the house you want before speaking to a mortgage broker. Engage them early, assess your affordability and make sure you’re working towards that goal.

That way, you’re not going to save up your deposit, but then realise you need twice as much because you’ve got bad credit, for example, or because your affordability is not quite there.

If you talk to your mortgage broker regularly, they can advise you on whether you’re on track or whether things have changed in the market. So speak to your mortgage broker early and be prepared.

Should I go freelance now or wait for my mortgage to go through?

If you go freelance before your mortgage goes through, the lender’s then going to want some evidence of the income, which means you need at least one year’s accounts. So you might end up having to wait quite a while before you can get the mortgage.

If you’re thinking about immediately going freelance, one of the questions on the application forms is about whether your income is likely to change in the future. Your mortgage broker would have to make your lender aware of your plans. It comes back to my previous answer about being prepared so you can plan ahead.

Talk to your broker, explain that you want to go freelance and we can explore what you need to do to get a mortgage. Perhaps you’ll need to go freelance earlier. Then, once we’ve got one year of your self-employed books, we can apply for the mortgage.

Or you might decide to stick with what you’re doing because the house is more important. Either way, it enables you to make the right decision at the right time.

How do I apply for a mortgage as a freelancer? What’s the process?

Speak to your mortgage broker. We’ll ask for the documents we’ve already mentioned and explore what we can do for you. We assess your affordability and identify who would be the right lender for you. Then we can organise an Agreement in Principle or a Decision in Principle. This is where we go to the lender with your circumstances in mind and they do a soft credit search.

That search wouldn’t impact your credit score, and the lender will come back to say that based on everything we’ve supplied, they are happy to lend a set amount. At that point, you get your Decision in Principle and you’re ready to get out there looking at property.

When you find the right house, you put the application with your broker. Throughout that period we communicate with you frequently about what’s happening and any changes. It all comes back to that theme of engaging with your broker nice and early and we’ll guide you through.

What else do we need to know about getting a mortgage as a freelancer?

We’ve pretty much covered everything. The only other thing is that we have all sorts of guides and information to help you. For example, we can explain where to get your documents if you don’t have an accountant.

I’ve got a guide to talk you through downloading self-employed information from the government – so we can help you with absolutely everything throughout the process.

MOST BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.