Self-employed and mortgage application.
Being self-employed in Ireland is no easy station these days, as recent government policy has shown. – thankfully, the exclusion for self employed and company owners/directors in the Covid payments system (Pandemic Payment/TWSS) has been reversed but it goes to show how this hugely important part of our economy can be perceived.
There was a myth around Ireland that if you were self-employed there was no chance of getting a mortgage and if you had half a chance, you were made to jump through millions of hoops the PAYE worker didn’t know existed. Thankfully this is not the case.
You will be expected to prove the same criteria as anyone else seeking a mortgage. Proof that you earn what you say you earn, that this is a sufficient amount to afford the loan and the ability to be able to repay the monthly repayments. That is it. Same as everyone else. You just have to prove it through a different set of documents.
What documents will a bank require for a self employed mortgage?
- Audited accounts for three years.
- Tax returns confirmation/clearance certificate.
- Company profile.
- Business bank statement.
Other than that, it will be the same docs required by any teacher, payroll assistant or indeed, any PAYE worker.
Is it more difficult to apply for a mortgage if you are self-employed?
There are ways to make the whole process easier. A good accountant and a good mortgage broker can help get the best mortgage for you, in the quickest turn around time, with the least amount of hassle.
These are the FAQ’s we deal with on a regular basis:
Which is the best bank for a self-employed mortgage?
As mortgage brokers we deal with most lenders in the market and know the different approaches each one takes. Certain lenders will take regular pension contributions into account, others will consider retained profits in the company as a means to show affordability. We will speak to whichever lender we feel will deal with your case and circumstances most favourably.
How many years do I need to be self-employed to apply for a mortgage?
Most require that you have been trading for three years. Some lenders will accept two years of accounts or the company’s Chapter 4 section 11 form.
Can I remortgage if I’m self-employed?
Of course! At the end of the day being self-employed does not stop you from remortgaging. You may though have to pay an early repayment charge with your current provider.
Do different types of self-employment require different paperwork?
Sole trader
As the name suggests, sole traders are one-man bands. Keeping records and accounts is fairly straightforward – and you get to keep all the profits. It’s these profits a lender will look at when assessing your income. If you do your tax by self-assessment and get revenue to calculate it for you, you may get a form called an from 11, chapter 4, which shows the total income received and total tax due. Your lender may want to see this alongside your accounts, so dig it out and have it ready.
Partnership
If you go into business with someone else, you might set up a partnership. When looking at your income, mortgage lenders will look at each partner’s share of the profit. So, make sure you have accounts that show exactly how much money you made so your potential mortgage lender can easily see your annual income.
Limited company
Setting up a limited company means you keep your business separate from your personal affairs. A limited company will have at least one director and, in some cases, a company secretary. Directors normally pay themselves a basic salary plus dividend payments. Make sure the lender takes both these elements of your income into consideration when assessing mortgage affordability
If we can help, or you want to discuss any aspects of getting a mortgage, see our mortgage broker first time buyer page or call us on 01 5138710 or email info@citywidefinancial.ie