MORTGAGES
Mortgage with 1 Year’s Accounts
Sub-Heading Text for mortgage 1 years account-Sub-Heading Text for mortgage 1 years account
Self Employed Mortgage with 1 Year’s Accounts
No matter who you are and your financial situation, it can be hard to apply for a mortgage. Things are more complex when a person is self-employed. Especially if you are newly set up and applied for a mortgage with 1 year’s accounts.
Normally, a mortgage lender will be looking for at least 3 years of evidence on your accounts. This is because they want to see that you are someone who will pay back any money that they lend. This is a key part of their affordability and eligibility checks.
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Only been trading for 1 year? You still have options.
If you only have been in business for a short time, then you will have less than the 3 years accounts. If you only have a year’s accounts, then you are going to find it much harder to apply for a mortgage. This is because the lender will find it harder to carry out their affordability checks.
It is important to know that all is not lost when it comes to arranging a mortgage with 1 year’s accounts. Sure, it is going to be a little trickier to do and there might be other things that you need to consider. But there are specialist lenders and brokers who can help you to secure yourself a mortgage. Even if you do not always fit into the standard expectation for an applicant.
Who can apply for a mortgage with 1 year’s accounts?
If you are self-employed then this type of mortgage can be applied for. This applies in a variety of situations. Whether you run a company as a director, you are classed as a sole trader, you are a contractor or you are any other individual who can be described as self-employed. All that is asked is that you are an owner of more than 20% of the business.
You can apply for these mortgages for both personal and business purposes. They can then be used to purchase a buy to let property or somewhere to live. In fact, you can apply simply to make an investment into your future. Be that of your own personal life, with your family, or your business.
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How much can I borrow with only a years’ worth of books?
As with all mortgages, the amount you can borrow is dependent on several factors. These include the income you are receiving, minus your expenditure to live in or maintain the property. Another big factor is your credit score, which can vary from lender to lender, as they use different methods of credit scoring. There are 3 big credit agencies which lender look at and therefore it is a good start to obtain a credit report which details the information from all these sources. Luckily enough we have included a link for to the one we recommend as they provide a free 30-day trial.
What documents would I need to prove my income?
Depending on your status of self-employment can determine which documents the lender would require. Below I have broken down the different documents that could be asked for if you are applying for a mortgage with 1 year’s accounts:
Sole Trader
Most lenders want to see your self-assessment return, commonly known as SA302’s or your tax calculations. This breaks down how much profit from self-employment you have had over a financial year. You can either download these yourself from the HMRC website or if you employ an accountant, you would be able to ask them to provide you with the return.
In certain scenarios, where your self-assessment does not cover your whole years trading, finalised accounts signed by a qualified account can be used to prove earnings along with bank statements to back up the figures.
Limited Company Director (more than 20% ownership)
Again, in this scenario lenders ideally like to see your tax calculation as this will break down any salary you are paid and dividends you are drawing from your company. However, this does not always show the whole picture if you are retaining profits in the business.
There are lenders who with fully audited accounts, can look at profit in the business plus the salary you draw. These lenders would be looking at your accounts and, in some cases, request an accountant’s certificate. This is where your accountant would verify the figures and provide an insight to the ongoing sustainability of the business. In some cases where you have been trading for 18 months, an accountant can provide a projection for the 2nd year to give the lender confidence with their lending.
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What about remortgages?
These mortgages are not only applicable when it comes to buying a new property, they can also be used for remortgages. They work much the same as the standard mortgages however the lender will look at whether you have any equity in your current property. It is this level of equity which will then tie into how much you can release from the property and borrow.
It is likely to be easier to secure a remortgage with 1 year’s accounts if you can show that you have made good repayments on your current mortgage. This is because it demonstrates that you have a good level of control over your finances. It also shows that you are a stable borrower who makes payments consistently. This is something lenders do like.
I have got bad credit; can I still get a mortgage?
While having bad credit does reduce your ability to find a high street lender, there are specialist lenders in the market who can consider a years’ worth of accounts alongside bad credit. Understanding the reasons for the bad credit and when it happened are important and in most of these cases a higher deposit is requested by the lender. This puts their mind at ease with the additional risk they face. By using a specialist lender, you are likely to see much higher rates than the high street banks provide but they can give you a few years to repair your history and then move to a more favourable lender if you keep your finances in check.
How can a mortgage broker help?
One way to make securing a mortgage with 1 years accounts easier, is to speak to an expert. This is where someone such as a mortgage broker can help. A mortgage broker can ensure that you have all the relevant documentation and evidence ready. As well as that you are doing everything right. Both of which will help the application to be approved.
Why choose Matrix Mortgages?
Over the years, our business principle, Yasheen has built up a reputation of finding solutions for self-employed businesspeople. In fact, it is one of the areas he enjoys the most. We understand your situation, pressures, and dreams. Our job is to take away the added stress and give you the dream without the stress!
As well as approving a mortgage with 1 year’s accounts. We can also save you time too. This means that you can focus on your business, or perhaps some other aspects of moving home. After all the planning and preparation that goes along with this takes time. It also limits the amount of times that you are declined, impacting on your credit rating.
How it Works
The Award-Winning Matrix Mortgages Process – Easy as 1,2,3! Follow Our 3 Simple Steps to Securing Your Dream Home
1
Enquire
Complete our quick and easy contact form, email, call or WhatsApp us to get started
2
Apply
We handle all the necessary paperwork and help manage your entire mortgage process
3
Complete
All done. Sit back, relax, and feel great about your decision to work with us
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FAQ
A mortgage is a loan from a bank or building society that allows you to purchase a property. The loan is repaid over several years with interest dependent on your personal financial situation.
A mortgage can be between one or more people. However, if you do not keep up your repayments, the lender can repossess your property.
All mortgage lenders have their own requirements. The following factors take a part in whether you will be given a mortgage offer, and how much the lender is willing to borrow you:
- Amount you wish to borrow
- Size of your deposit
- Employment status and income
- Credit rating
- Outgoings
- Existing debt
- Your age
- Length of the mortgage term
- Your credit status
- If you are applying solely or jointly
To be accepted by a lender, you need to assure lenders that you can repay your mortgage. One main aspect lender’s look at is your credit report to check your repayment history. Your credit file will include current and existing records on items such as credit cards, loans, overdrafts, mortgages, mobile phone/s, some utility payments and all accounts that have been open in the last 6 years. If your credit report shows arrears, defaults, CCJs, debt management plans or bankruptcy in the past, there are mortgage options available which we can help you with.
To get a mortgage you will need to save a deposit of at least 5%, but the more you save, the better your mortgage rate will be. If you have an existing property you own, you can use the equity in your property for this. Our skilled mortgage advisors can talk and guide you through the benefits and the difference in your monthly payments by increasing your deposit.
As soon as you have found the property you want to buy, our mortgage brokers will evaluate your personal needs and situations and recommend a mortgage product that is right for you. They will compare a wide variety of mortgage quotes, including products that cannot be found on the high street or comparison sites. This guarantees that you get the right deal at a right price.
If you agree to the mortgage product your advisor suggests, you will receive your Agreement in Principle (AIP). This will provide you with an estimated total of how much the lender is willing to borrow you and allows you to put an offer in on your ideal home.
If your offer is accepted, you will need to arrange a solicitor to deal with searches, surveys and contracts, which we can arrange for you. We manage the entire mortgage application process through to completion, liaising with your solicitor and lender to make sure your application is successful.
There are different mortgage options such as a remortgage. In this case we would recommend looking for a new mortgage deal approximately 3 months before your current deal expires. By beginning the mortgage process early it will allow you to prepare ahead of time to compare all the available mortgage products and submit your application. Do not worry if your mortgage is approved early as we will ensure that the completion date corresponds with your current deal’s end date.
A lot of mortgage lenders will lend you up to five times your salary. However, this all depends on several factors including your age, number of dependants and current financial commitments. Lenders will work out how much they will lend you based on what you can reasonably afford each month after you have paid your bills, credit cards, loans etc.
In addition, our mortgage advisers will assess your individual needs and situations to see how much you can realistically borrow before an application or credit search is completed. If you choose to continue with the application, our advisers will understand which mortgage lenders to approach to ensure you get the required loan amount.
In order to buy a property with a mortgage, you will need to save a deposit of at least 5%. However, the more you can save, the better your rate will usually be. There are a few exceptions to this as follows:
- If you already own a home, you can use the equity from your property for the deposit
- If you are a council tenant and are looking to buy your current home under the Right to Buy scheme, most mortgage lenders will now accept your Right to Buy discount as a deposit.
As property prices increase, first time buyers are struggling to save enough money to buy a home. In cases like this the government has therefore introduced ‘Help to Buy’ to allow first time buyers to get on the property ladder.
Our expert mortgage advisors are aware of various mortgage deals available and can help you decide which mortgage deal best fits your needs.
When buying a home, you will need to save enough money to pay for other factors and not just your mortgage deposit. This also includes paying for your mortgage fees, moving costs and legal expenses. We have listed below all the possible purchase and moving expenses you may have to pay, to help you with your budgeting. The exact fees and amount you will pay, is dependent on the value of the property you are buying and your chosen mortgage lender.
Mortgage booking fee: Some mortgage lenders will charge this to secure a fixed-rate or tracker deal.
Cost: £99 – £250
Mortgage arrangement fee: Some mortgage products will incur a mortgage arrangement fee, in addition to the mortgage booking fee. This fee is either paid upfront or added to your mortgage debt. If you chose to add it to your mortgage, the cost will increase over the lifetime of your mortgage.
Cost: £1,000 – £2,000
Telegraphic transfer fee: Needs to be paid to the lender to transfer the amount you are borrowing for the mortgage to the seller’s solicitor.
Cost: £25 – £50
Mortgage broker fee: If you use a mortgage advisor to arrange your mortgage for you, you will need to pay a fee or commission, depending on the value of your mortgage.
Cost: £197- £597. However, this may vary if you need to use a specialist lender
Valuation and survey fees: Charged by the lender to value the property you are buying. The cost varies according to which survey you choose:
Home condition survey: Most basic and cheapest of all the surveys and often used for new-builds.
Cost: £250
Homebuyer’s report: More in-depth survey, assessing the inside and outside of the property, and also includes a valuation.
Cost: £400
Building survey: A complete survey generally used for older or unconventional properties. Although they are the most expensive, they are certainly worth considering, as it could potentially save you a lot of money if any structural problems are found with the property.
Cost: £600
Higher lending charge: Can be charged by lenders if you borrow most of the value of the property.
Cost: Approximately 1.5% of the amount you borrow
Searches: Your solicitor will arrange for the local authority to check whether there are any issues that could affect the property’s value. The local council can charge a fee for carrying out these searches and may also request that a drains search be done at the same time.
Cost: £250 – £300
Legal costs: You will need to instruct a solicitor to carry out the necessary legal work for you.
Cost: £850 – £1,500 plus VAT
Stamp Duty Land Tax (SDLT): Charged on all purchases of UK land and property over £125,000. However, the amount you will pay is dependent on the purchase price of the property you are looking to buy, and whether you have owned a home before as follows:
First home: First-time buyers are exempt from paying SDLT on the first £300,000 of the purchase price of a property up to the value of £500,000. All purchases in excess of £500,000 will pay the standard stamp duty rates as follows:
- £0 – £300,000: 0%
- £300,001 – £500,000: 5%
Next home: If you are currently or have previously been a homeowner, you usually pay SDLT on increasing portions of the property price:
- £0 – £125,000: 0%
- £125,001 – £250,000: 2%
- £250,001 – £925,000: 5%
- £925,001 – £1.5 million: 10%
- £1.5 million+: 12%
Second property: If you are looking to buy an additional property, you usually have to pay 3% on top of the normal SDLT rates as follows:
- Less than £125,000: 3%
- £125,001 – £250,000: 5%
- £250,001 – £925,000: 8%
- £925,001 – £1.5 million: 13%
- £1.5 million+: 15%
For example, if you buy a next home for £275,000 the SDLT you owe is calculated as follows:
0% on the first £125,000 = £0
2% on the next £125,000 = £2,500
5% on the final £25,000 = £1,250
Total SDLT = £3,750
Information correct as of October 2021 – Source: www.gov.uk/stamp-duty-land-tax
Removal costs: Paid to the removal firm (if you choose to use one) to pack, transport and deliver your possessions to your new home.
Cost: £300 – £600
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