Securing a mortgage while self-employed

ideaburst

Hi folks,

I currently work a pretty flexible 9-5 corporate job but am considering going out on my own to work as a consultant full-time. I am weighing up all my options but I can see how I could make comparable money after a time working for myself.

However, as everyone knows it can be 'risky', and something I see myself doing in the next year or so is applying for a mortgage. I am wondering what people's experiences are around applying for one whilst self-employed? I know the banks can be wary, especially if your income fluctuates from month to month as it will do?

I did speak to the bank and they said they would need a few years' worth of accounts if you are self-employed, but what about if you are just starting out? I guess they would have to assess based on maybe 1-2 years' worth of income before they could consider you.

Thanks

listermint

ideaburst wrote: »

Hi folks,

I currently work a pretty flexible 9-5 corporate job but am considering going out on my own to work as a consultant full-time. I am weighing up all my options but I can see how I could make comparable money after a time working for myself.

However, as everyone knows it can be 'risky', and something I see myself doing in the next year or so is applying for a mortgage. I am wondering what people's experiences are around applying for one whilst self-employed? I know the banks can be wary, especially if your income fluctuates from month to month as it will do?

I did speak to the bank and they said they would need a few years' worth of accounts if you are self-employed, but what about if you are just starting out? I guess they would have to assess based on maybe 1-2 years' worth of income before they could consider you.

Thanks

Unsure why you would go to self employment and at the same time want to go for a mortgage.

It seems counter productive unless you delay the mortgage until you have been established in self employment.

Or delay the self employment until you are established with a mortgage.

I don't see how you will succeed with both simultaneously

duploelabs

Secure the mortgage first, then make the change to being a consultant

ideaburst

Thanks guys. Yes that is another piece of info to mention here I would do one of those. The smart move would be to get the mortgage first, then I can do what I like.

Just wondering from a general perspective as well though re self-employed people applying for a mortgage. I guess it all depends but it defo would make sense to apply for it whilst employed!

CIARAN_BOYLE

ideaburst wrote: »

Thanks guys. Yes that is another piece of info to mention here I would do one of those. The smart move would be to get the mortgage first, then I can do what I like.

Just wondering from a general perspective as well though re self-employed people applying for a mortgage. I guess it all depends but it defo would make sense to apply for it whilst employed!

At least one bank wants 3 years accounts of a self employed person when it comes to mortgage applications.

ideaburst

CIARAN_BOYLE wrote: »

At least one bank wants 3 years accounts of a self employed person when it comes to mortgage applications.

I was actually told the exact same thing by one bank. So what then if you are self-employed for only a year or two - guess you have to wait?

I reckon I wouldn't be applying for one for another year or two possibly, so that makes me wonder whether I should just stick with employment for another 1-2 years, or jump this year. Possibly the former option is a better one really.

CIARAN_BOYLE

ideaburst wrote: »

I was actually told the exact same thing by one bank. So what then if you are self-employed for only a year or two - guess you have to wait?

I reckon I wouldn't be applying for one for another year or two possibly, so that makes me wonder whether I should just stick with employment for another 1-2 years, or jump this year. Possibly the former option is a better one really.

Just have to wait like an employee who is on probation.

Axwell

duploelabs wrote: »

Secure the mortgage first, then make the change to being a consultant

This is the only option if you have any real intention of getting a mortgage in the next year or so. You said you can see yourself making comparable money after a time, the longer that takes the further away getting a mortgage becomes. Add in the fact if you are waiting a few years to do so you are knocking a few years off the amount of time you can spread the mortgage repayments over.

Are you also going to have to try save a deposit in this time while being self employed? That's a lot of risk to take on with no guarantees.

Stick at the job for now - get your mortgage sorted and then if you still want to go the consultant route do so then.

thecommander

I'm a proprietary director of a company, so fall under self employed rules. Was just approved for a mortgage.

Had to supply;
3 year certified accounts for company
3 Years P60
Letter from accountant to certify directors renumeration (so wage, pensions, expenses etc) for last 3 years
Tax clearance cert
Self assessment Form 11 for last 3 years
6 months company bank statements
and the all of the usual stuff you'd have for a mortgage, so wage slips, personal bank statements, expenses etc.

Not only are they credit checking me, they credit check the company. The insisted on all of the above, so I'd imagine if you couldn't furnish them then they'd decline. Took the guys of 6 weeks of back and forward to get it approved, and thats with a profitable company paying a wage bang on time every month for the last 10 years.

Haven (part of AIB) would only give average of our wages over 3 years, so they ruled themselves out.

ideaburst

thecommander wrote: »

I'm a proprietary director of a company, so fall under self employed rules. Was just approved for a mortgage.

Had to supply;
3 year certified accounts for company
3 Years P60
Letter from accountant to certify directors renumeration (so wage, pensions, expenses etc) for last 3 years
Tax clearance cert
Self assessment Form 11 for last 3 years
6 months company bank statements
and the all of the usual stuff you'd have for a mortgage, so wage slips, personal bank statements, expenses etc.

Not only are they credit checking me, they credit check the company. The insisted on all of the above, so I'd imagine if you couldn't furnish them then they'd decline. Took the guys of 6 weeks of back and forward to get it approved, and thats with a profitable company paying a wage bang on time every month for the last 10 years.

Haven (part of AIB) would only give average of our wages over 3 years, so they ruled themselves out.

Wow....just wow. The banks are taking absolutely no chances these days. Actually doubt the CIA would ask you for as much info for a job with them.

Yes so I can see the consultant / freelancer route actually being quite lucrative in my area, which is in massive demand. Only earlier I had a client offer $500/week for a few hours work per week.

So I am seeing that there is huge opportunity out there, but I will always be somewhat restricted working 9-5. Of course another way of looking at it is keep the day job and make as much as you can on the side first at least.