Many lenders will want SA302 forms for at least the last two years you’ve been self-employed. You can order SA302 forms from HMRC through your Government Gateway account or print them off from your accounting software. So how do you prove you can afford a mortgage if you’re self-employed?įor starters, you’ll need to produce copies of your SA302 forms.Īn SA302 form is a government form that shows your annual income based on your self assessment tax return. Unlike employees, you don’t have payslips and a P60 form that prove how much you’ve earned in a given tax year.Your income fluctuates from month to month and from one year to another.That said, proving your income is a bit more fiddly when you’re self-employed. Lenders decide how much you can borrow based on your income and expenses, regardless of whether you’re employed or self-employed.
You can continue living in your home until you go into long-term care or pass away, at which point the company will sell it.īear in mind that you won’t be able to leave your home to your family when you pass away if you use an equity release scheme. Here, you sell all or part of your home to an equity release company. Your lender makes their money back by selling your home when you go into long-term care or pass away. Here, you’d take out a mortgage without having to make any repayments. If you already own a property and you’ve repaid all or most of your mortgage, an equity release scheme can help you cash in on its value. This is a mortgage where a trusted family member commits to taking over your repayments if you can no longer afford them If that’s not an option, you could consider the following alternatives: The key is to prove you have enough income – from your pension, investments, or other sources – to comfortably afford the repayments. That said, while getting a mortgage into retirement is trickier, it’s not impossible. So if you want to borrow a large amount, you’ll need to prove you can afford to make larger repayments in less time. The reason for this is that, once you retire, your income may become more limited and mortgage repayments could strain your finances.īecause of this, lenders will likely offer you shorter repayment terms as you get older. Most standard mortgages are designed to end when you reach retirement age. We’ll talk about how your credit history affects your mortgage application in more detail below. This helps them understand how you’ve handled credit in the past and assess how likely you are to default. With this in mind, try paying off as much of your debt as possible before you apply for a mortgage.Īs part of your mortgage application, lenders will also look at your credit history.
This is because they may take the view that a larger repayment would put your finances under too much strain. If your expenses make up a very big chunk of your income – this is known as your debt-to-income ratio – lenders may decide to lend you a smaller amount than they otherwise would. Whether you pay spousal maintenance (for example because you’re separated or divorced) and how much you pay.Whether you have kids and how much it costs to care for them, including your share of childcare costs and school fees.How much you spend on travel, including the cost of running your car.Your bills – Council Tax, utilities, mobile phone contracts, and insurance policies.Any outstanding loans and credit card debt.Lenders want to make sure you’ll be able to keep affording your mortgage, so they’ll also want to know about: While your income is the single biggest factor affecting how much you can borrow, your expenses can also make a difference.
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