Mortgage Problem for Self-Employed People

A broker gives advice to self-employed people.

Many self-employed people are having problems with mortgage lenders. They do not know that lenders assess income differently. Jamie Elvin, a mortgage broker, says this is a problem for entrepreneurs.

Jamie says many business owners keep their salary low for tax reasons. When they apply for a mortgage, lenders only look at the income they have taken. This can be a problem because some lenders also consider the company's profits.

Jamie had a client who could borrow between £225,000 and £600,000 from different lenders.

The difference was not the client's income, but how the lenders assessed it.

Jamie Elvin is a mortgage broker.

Jamie says many directors keep profits in the company to improve cash flow or reduce tax.

Jamie says many business owners think they cannot borrow more when they have simply chosen the wrong lender. This is a common misconception when arranging mortgages for the self-employed.

Hitting a borrowing limit can cause business owners to make bad decisions.

Some business owners increase their salary to get a mortgage, but this can create tax problems. Choosing the right lender can be a better solution.

Being self-employed means managing your own income.

Jamie warns that going to just one bank can give a misleading idea of how much you can borrow.

Jamie says lender criteria can vary greatly for limited company directors. Choosing the right lender can make a big difference in being able to buy a property.

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