Joint Mortgage One Self-Employed, One Employed

Can I get a joint mortgage if one person is self-employed and the other is employed?

Absolutely. It’s very common. Lenders combine both incomes to work out how much you can borrow. They’ll assess each person differently.

The employed partner’s income is quite simple and comes from payslips or P60s, whereas the self-employed partner’s income takes a bit more paperwork. It’s not an issue from an application point of view.

Can you get a bigger mortgage if one person is self-employed? How much can you borrow?

Not necessarily a bigger mortgage, but potentially more flexible. It will depend how much provable income you both have. With most lenders, you can generally borrow somewhere between four and five times your combined annual income. Some go a little higher, some a little lower.

If your accounts are strong, being self-employed doesn’t hold you back. Sometimes it can benefit you, because of how you can access that income and how the company is set up. It could give you more options from an affordability point of view.

How does one of you being self-employed affect your eligibility for a joint mortgage?

It doesn’t make you ineligible, it just changes how you’re assessed. Lenders look for at least one or two years of trading history for the self-employed partner. The key is going to be consistency and how you evidence that income.

It doesn’t affect eligibility, just the administrative part of the application process on the evidence side.

Are there any specific requirements or restrictions on joint mortgages if one is self-employed and one is employed?

Again, it’s mostly around evidence. The self-employed person needs to show accounts and tax returns, whereas the employed partner just needs payslips. Other than that, it’s business as usual. There are no restrictions on the mortgage itself if one of you is self-employed and one is employed.

What obstacles might self-employed individuals have to navigate when applying for a joint mortgage with someone who is employed?

They will be the same things you come up against on any self-employed mortgage application. Fluctuating income is quite a common one. Lenders do like income stability, because it’s easier to assess. If your earnings are bouncing up and down, they’ll likely take an average – or use the lower if it is on a downward turn.

Timing is important, especially with accounts. If you’ve had a dip recently and you submit the accounts, it can make a big difference to your affordability. Getting the evidence together, fluctuating income and timing are the main factors for self-employed people, and these can have a big impact on the outcome of applications.

Lastly, credit status is also key. If people aren’t really paying attention to that and not meeting the terms and agreements of their other accounts, that can really hinder them from a mortgage perspective.

What should self-employed individuals know about the income assessment process on a joint mortgage with an employed person?

Generally speaking, lenders take the latest two years’ tax returns or your company accounts. Some lenders look at your latest year if your accountant has given them confidence in that.

However, if it is not justifiable, or it’s going down, or going up so rapidly that it looks out of place compared with previous years, there will be more questions. It’s more difficult from an affordability perspective until an underwriter gets their hands on it and makes their final decision.

What I would say is, have a chat with a broker before you finalise your accounts. Sometimes a broker and an accountant liaising with one another can get everyone’s intentions aligned. An accountant usually helps you mitigate as much tax as possible, which can potentially lower your income – while a mortgage broker will want as much income as possible to meet your goals and intentions.

Having those preliminary discussions before you make final decisions can be really helpful in the application process.