Joint Mortgage – One Applicant Self-Employed

Joint Mortgage – One Applicant Self-Employed

Getting a joint mortgage can boost your borrowing potential – which means you could afford a more expensive home. The good news is that applying with someone in self-employment is very common and usually straightforward.

Can you get a joint mortgage with a self-employed person?

With a joint mortgage, lenders combine both incomes to calculate the loan amount, which usually means you can borrow more. Most mortgages will accept a joint application, and it’s fairly common for one or more applicants to be self-employed. 

The lender assesses affordability for each applicant separately and also looks at your credit score. If one of you has bad credit but the other has a good financial history, you may find it easier to get a mortgage jointly than individually.

How much can you borrow if one applicant is self-employed?

How much you can borrow depends on a few factors, but your income is an important one. The general rule is that you can borrow around four to five times your annual earnings. With a joint mortgage, lenders calculate this based on your combined annual income.

Here’s an example: your partner earns £40,000 on PAYE and your self-employed income is around £20,000 per year, so your combined income is £60,000. That means you could potentially borrow up to £300,000 on a mortgage. 

An important step in the mortgage process is to prove your income. For an employed person this is simple – you simply provide a few payslips. The self-employed applicant usually needs to supply a couple of years’ business or tax records.

What documents do you need for a joint self-employed mortgage?

To apply for a joint mortgage, self-employed people usually need to give the lender tax records or company accounts for the past one to three years.

Both applicants also need to supply proof of ID via a passport and driving licence, plus recent bank statements.

How does it work for a Sole Trader / Contractor / Limited Company?

When you’re ready to buy a home, self-employed mortgage lenders will ask for certain documents. These often and may depend on your business set-up. 

Sole traders often need one to three years’ tax details, via self assessment forms that state your annual earnings. 

Limited Company Directors usually need one to three years’ of accounts. If you pay yourself a low salary for tax reasons, you should seek out a lender that accepts net profit in your business as well as salary and dividends. It should mean you can borrow more – we highly recommend seeking mortgage advice to find the most appropriate deal.

Contractors may be treated as sole traders or limited companies, but certain lenders will accept your day rate as your income. You may need to supply the details of your current and previous contracts.

Does a mortgage have to be in joint names?

Joint mortgages are popular because they generally mean you can borrow more and have equal ownership of the mortgage. Ultimately though, it’s your decision whether you apply singly or jointly. 

If two people are sharing the mortgage payments, you may choose to put both names on the mortgage – that way you will share the equity. Another option is to name one person on the mortgage but add two names to the deeds for the property, but not all mortgage lenders allow this. 

How can a Mortgage Broker help?

CTA Mortgage Advice Centre is here to make it simpler to get a mortgage and buy a property. We work with people in all kinds of situations to find them the most suitable deals – from First Time Buyers to home movers, plus those looking for remortgages and Buy to Lets. 

We can explore your plans and advise you on self-employed mortgages, joint mortgages and the various mortgage products that will meet your goals. When you’re ready to apply for a mortgage, we will support you with all the paperwork and processes.

Contact us today to see how we can help you.