Buy to Let Mortgages for Self Employed

When you, as a self-employed individual, applying for a buy-to-let mortgage, the criteria are similar, but the assessment of your income and financial stability differs.

Self Employed Buy to Let Guide

Strong Credit History: 

Maintaining a good credit history is still crucial for obtaining a buy to let mortgage when you’re Self employed. Lenders will evaluate your creditworthiness by reviewing your credit report and credit score.

Proof of Income: 

As a Self employed borrower, you’ll need to provide evidence of your income. This typically involves providing at least two to three years of tax returns or financial statements, including profit and loss statements, to demonstrate your earnings.

Income Requirements: 

Lenders will assess your income to determine your ability to cover the mortgage payments. Your income should be sufficient to meet their criteria, typically around £25,000, but some lenders don’t have a minimum income requirement. Self employed individuals may need to provide additional documentation, such as bank statements or accountant certified financials, to prove their income.

Age Consideration: 

Just like employed borrowers, Self employed individuals may also face age limits imposed by lenders. Most lenders have an age limit, often around 75 years old, although it can vary between lenders.

Deposit Requirement: 

You’ll need a deposit when applying for a buy to let mortgage. The minimum deposit typically ranges from 20% to 40% of the property’s value. A larger deposit can improve your chances of securing favourable terms.

Rental Income Coverage: 

Lenders will assess the potential rental income from the property. Generally, your rental income should exceed your mortgage payments by a certain percentage, often around 125%, but this figure can be higher depending on your tax band. 

Affordability Rules: 

While many buy to let mortgages are not subject to regulation by the Financial Conduct Authority (FCA), there may still be affordability rules to consider, especially if you plan to rent the property to a close family member.

When you’re Self employed, it’s essential to work closely with potential lenders with experience dealing with Self employed individuals. They can guide their specific requirements and help you navigate the application process effectively. Additionally, consulting with a mortgage adviser who specialises in Self employed borrowers can be beneficial in finding the right lender and mortgage product for your unique situation.

Can I even get a buy to let mortgage if I’m Self employed?

Certainly! Lenders are open to self-employed applicants but may require additional documentation compared to salaried individuals. Consider it an opportunity to demonstrate your financial stability

What’s the deal with income proof for Self employed?

Lenders need reassurance about your ability to maintain mortgage payments during rental void periods. Be prepared to present two to three years of tax returns and business accounts, highlighting consistent income. Transparency is key!

Do I need a bigger deposit for a buy to let when being Self employed?

Whether you are Self employed or not, most lenders require a minimum deposit of 25% for buy to let; while some lenders will allow less deposit, the rental income will still need to cover 125% of the mortgage payment. Also, the lenders that do offer smaller deposits for buy to let’s charge a premium for it, meaning this will usually cost you more in interest.  

What kind of mortgage rates can I expect?

Interest rates might be slightly higher for buy to let mortgages than residential mortgages. But don’t let that discourage you! Shop around, compare deals, and consider seeking expert advice from a mortgage broker specialising in Self employed mortgages.

What mortgage types are available for buy to let?

The usual suspects are all there: fixed-rate, variable-rate and tracker mortgages. Choose the one that best aligns with your financial goals and risk tolerance. Remember, a good mortgage advisor can help you navigate the options.

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