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Mortgages for the self-employed Recent research from Aldermore found that nearly two thirds (62%) of selfemployed first time homebuyers do not know how they will get on the property ladder, and almost a third (32%) who have recently bought a property actually had to give up being self-employed in order to secure a mortgage.
Charles McDowell, Commercial Director, Mortgages at Aldermore 1. Find an independent mortgage adviser who can provide you with good advice and offer continued support throughout the application process.
5. Mortgage providers often require both business bank statements and personal bank statements so make sure these are in good shape.
2. Be prepared for the process. Applications should be accompanied by the necessary accounts prepared by a suitably qualified accountant.
6. Be aware of change. If you are considering switching company type prior to applying for a mortgage, this could get in the way during the application process.
3. Ensure your accounts are up-todate. Unlike other lenders, Aldermore will usually use the latest years’ figures rather than an average of the last two years when making the assessment, if net profit is level or rising.
7. Consider business performance. Mortgage providers will evaluate the performance of the business and they are looking for profits to be consistent or increasing. By following these simple tips, the dreaded difficult mortgage application process that many self-employed individuals face should become less challenging.
If you are self-employed and looking to apply for a mortgage, following these top tips could help the process run smoothly:
4. Be aware of your credit score. There are a number of credit bureaus that provide credit reports and are a great way to understand your credit history and can give tips to improve your financial health.
EXPERT
George De Silvo, Solicitor, Corporate, Irwin Mitchell
Getting investment ready Businesses seeking external investment for the first time should consider the key issues business investors will have in the forefront of their minds. Being one step ahead, businesses will show a great business proposition, backed up by good internal procedures, demonstrating
a reliable investment. Ensuring good housekeeping will help deliver a smooth process, without distraction from onerous due diligence enquiries. • Business Plan: an investor will want to see a clear and achievable business plan, as this will be the foundation of their investment. • Term sheet negotiation: management and investors should agree key terms at an early stage to avoid disputes with these issues as the transaction progresses. • Data rooms: cloud based storage platforms offer the ability to share large numbers of documents efficiently. Being organised in advance will avoid the painstaking task of locating a copy of that important contract. • Commercial/IP: material contracts should be recorded in writing and
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intellectual property rights should be adequately protected, by registration or licence. Data protection is an evolving area of law the company should have proper procedures on holding and sharing personal data. • Employment: it is a legal requirement for all employee to have written terms and conditions. Key employees should have adequate restrictive covenants to protect the business’ and investors’ interests. • Tax: investors are likely to want to take advantage of EIS/SEIS or other reliefs. Initial corporate restructuring may be required as a preliminary step to investment. Tax advice will be crucial. • Corporate: existing shareholders’ agreements should be suitable and the company’s statutory books and filings at Companies House must be up-to-date.
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