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If you work for yourself, finding the ideal mortgage is far more difficult than if you have a job. Since there are several techniques to determine income and no two lenders use the same method, you can approach two different lenders and receive radically different offers. An experienced specialized broker’s knowledge is crucial in this situation.
Self-employed candidates may struggle to get accepted simply because they don’t match the tight requirements set forth by lenders. The easiest strategy to be accepted is to find a broker who is aware of which lenders have a thorough grasp of how you make your money.
How to find the right broker for you
Choosing which broker to contact while applying for a self-employed position is one of the problems.
Basically, there are two approaches to this:
conduct independent research
Make use of our broker matching service
The former takes time and is not a certain way to identify the best broker for your needs, much alone the greatest mortgage rate.
The latter will evaluate your circumstances and pair you with a whole-of-market mortgage broker that specializes in aiding independent contractors like you and has a network of business contacts.
For instance, the ideal supplier for a business director mortgage that is financed against retained earnings may not be the proper lender for a solo proprietor establishing their income via SA302s. This is so because every lender has different standards and a different approach to risk.
Services they provide
Although mortgage brokers offer a wide range of services, their primary responsibility is to assist you in obtaining the best home loan terms.
The specifics of what they perform for you will depend on several things:
- Self-employment type: Each lender has a different level of risk. Some will be better suited to freelancers, while others will be better suited to contractors with a constant flow of business set up. An industry-savvy broker will be able to identify which lender is best for which borrower.
- Income type: An advisor will ensure your income type is packaged to match the providers’ criteria.
- Trading history: When determining affordability, most lenders like to see three years’ worth of verified accounts, however it is feasible to borrow with just one year’s worth of trade. Which lenders will take into account your particular circumstances will be known by your broker.
- Proof of income: A mortgage broker with expertise in self-employed loans is aware of lenders that use an adaptable approach to determining affordability.
- Credit file:Although it will restrict your options for lenders and products, bad credit is not always a deterrent to obtaining a mortgage. The trick in this situation will be to approach the right lender and package your application properly, both of which your broker may assist you with.
- Deposit amount: The amount of money you have to put down will be discussed, but a broker may be able to enhance it by pointing out assets you might use to secure the loan.When you work with the correct broker, they will help you with every stage of the procedure, from finding the best lender to assembling sufficient income documentation to submitting your application in line with the provider’s requirements.
How much will an advisor charge?
There is no standard fee that all mortgage brokers must charge, and some do not. However, keep in mind that value typically increases with price while searching for a specialist broker.
Those who do charge for their services fall into two categories: those that operate on a set fee, which is often between £500 and £1000, and those who charge a percentage of the loan, which is typically about 0.3% but may be as high as 1.5%.
The amount of the charge frequently reflects the complexity of the application and the amount of effort the broker has to expend to have it accepted. Applications that are rejected shouldn’t be charged.