6 November 2019

Supporting the growing self-employed

Going self-employed is increasingly becoming a lifestyle choice being taken by many. From May/July 2009 to 2019, the number of self-employed workers rose by over 1 million to 4.9 million, that’s 15% of the total employed, with the biggest increases being in London, Yorkshire and the South East. And looking at the trend over the coming 10+ years, this increase is set to continue according to the Office of National Statistics. Undoubtedly, many are choosing this path because it gives them the freedom of being their own boss, flexibility in working patterns and a more favourable work life balance. 

However, securing a mortgage for your self-employed client isn’t always easy. There can often be a trade-off between your client’s accountant wanting to show the most tax-efficient view of their business accounts and the mortgage lender needing to see an accurate picture of their net income. 

Proving your client’s income

Whether your self-employed client is a small business owner, freelancer or contractor, it is advisable for them to obtain an SA302 when they’ve completed their self-assessment online with HMRC. This gives the mortgage lender evidence of their earnings for the last 2 years. They can also get a tax year overview for any year and both are simple to print out direct from the HMRC self-assessment website. As long as they have their NI number and self-assessment unique taxpayer reference (UTR).

We take the latest year’s accounts exclusively 

Many lenders may not accept one year’s accounts for the self-employed applicants, choosing to take an average income over several years to assess affordability instead. This of course sets the premise that your client needs to have been self-employed for at least 3 years to be eligible. 

At Principality, we pride ourselves on being flexible, we accept mortgage applications for those who have been self-employed for just 2 years or more, and we will accept the latest year’s figures exclusively as long as the loan to value (LTV) is below 75%. This is a big bonus for applicants who have perhaps had a jump in profits in the latest accounting year or who have just completed a healthy second year of trading when perhaps their first year was low because they were just setting up their business. 

What’s more, if the loan to value is greater than 75%, we’ll take an average of the latest two years to assess affordability. And whether your client is a sole trader, partnership or part of a limited company, we’ll accept the latest year-end figures for within the last 18 months, not within 12 like other lenders. . 

Award winning and Recommended 

As the UK’s 6th largest building society, Principality are proud to be a Which? Recommended Provider for Mortgages 2018 and 2019. Why? Because we realise that it’s not just about what mortgage product best suits your customer but also which mortgage lender best supports them - and you - through flexible lending criteria, excellent service and our expert people who go that extra mile, as demonstrated by also being awarded What? Mortgage award for customer service.

Our underwriters always look to proactively assess each mortgage application on its own merits. And it’s this common sense approach to underwriting that makes Principality the go-to lender for many brokers when they’re looking for self-employed mortgages. 

If we make a promise, we keep our promise. Like giving you 48 hours’ notice by email before withdrawing any mortgage product; instructing your valuation on day one - not day two or three – so your customer’s offer isn’t delayed and answering any queries through our intermediary support team before you submit your case; and providing a dedicated underwriter, to always be on hand when you need them. 

To find out more about our products, please visit www.principality.co.uk/intermediaries
Or to contact our dedicated Intermediary team please call 0330 333 4021*, email intermediary@principality.co.uk or look us up on LinkedIn www.linkedin.com/showcase/principality-intermedaries


Loans subject to affordability and mortgage lending criteria.

* To help us maintain our service and security standards telephone calls may be monitored or recorded. 

Published: 06/11/2019