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How do the self employed prove their income?

If you are self-employed and you want a mortgage, the lender would seek some form of proof of your income.
You would probably need to show three years audited accounts though some lenders will accept only two years.
If you haven't been in business for long enough the lender should be able to accept a letter of confirmation from an accountant.
If you cannot show three years accounts, you may be able to self certify your income to the lender which is in effect asking you on your ‘honour’ to say what you are earning and likely to earn from being self-employed. It is important that you provide an accurate assessment as the lender can always at some point ask for some information that will show what you are declaring is accurate.

Tax: Hoist with your own petard?

Mortgage lenders providing self-employed mortgages generally only consider the net earnings rather than gross income to calculate the amount they will lend.
This may be a problem if you have - perfectly legally - offset expenses against earnings to minimise your tax bill and as a result cannot show that you can afford as large a mortgage as you feel you can.
The answer to this problem may therefore be a Self-Certification Mortgage.
Speak to one of our advisers and see how this could work for you.

How to apply?

When applying for a mortgage as a self employed person, you should always present your finances in a tidy way.
Get your bank statements together and be able to show any pension payments and past mortgage or rental payments.

You may find it's best to first speak with ourselves, as we know from experience which lenders will consider you and who may have special mortgage deals available. You may be even surprised to find that you are offered a normal interest rate and terms so it is worth exploring the market with our support.

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