Remortgage When Self-Employed 

Is it harder to remortgage if you’re self-employed?

Yes – in comparison to PAYE applicants, most mortgage related things for self-employed people are a little bit more difficult. That’s probably not the answer people want to hear, but it’s absolutely the case.

It doesn’t mean you can’t get the same outcome. It just takes a little bit more legwork and the right advice to achieve it. With the right advice and the right guidance, it shouldn’t be more difficult than it needs to be.

How long do you have to be self-employed to remortgage? Can you remortgage if you’re newly self-employed?

You’re going to have to have submitted your first set of accounts to HMRC before you can remortgage to a new lender. Otherwise, you won’t have any income evidence to put towards the application. Effectively, your borrowing power in that instance would be zero.

If you’ve already got a mortgage and you’re planning to transition from employed to self-employed, it’s a good idea to discuss your future intentions with a broker first. They can give you hints and tips that could potentially make the transition run smoother for you.

It’s all really going to depend on the deal you’re in at the moment, what your plans are timewise, and whether there are changes that can make your life a lot easier. But the advice will be given on a case-by-case basis.

How does the self-employed remortgage process work overall?

It’s very similar to the process for everyone else. There are obviously going to be differences in the documents required, because you will need self-employed documents rather than payslips and contracts.

A remortgage is a new application to a new lender, so they’re going to want to assess you as a borrower. We’re going to package up your documents for assessment, and they will instruct a valuation on the property. That may be a physical valuation or a desktop valuation to check the security for the loan.

The next step would be to offer you a mortgage. Then it’s just a case of a legal representative, carrying out their necessary checks – usually a solicitor appointed by the lender. Ultimately, they settle the debt with your existing mortgage provider and set up a new charge on the property with your new lender. That’s the remortgage process complete.

Can you remortgage with no proof of income?

No, you can’t. If you’re applying to a new lender, they’ll want to assess you. You’re going to need proof of income to get any borrowing.

The only instance where someone could get a mortgage with no income proof whatsoever would be if they’re on the application with other people who have enough income to service the loan by themselves. You could then just say your income is zero.

Can I remortgage if I have bad credit and am self-employed?

Yes, you can. It will depend how bad your credit is in terms of the options you will have. Poor credit could result in the business being placed with a lender off the high street, or even a specialist lender, which potentially means higher fees and interest rates.

If the situation is very bad and really recent, it could potentially be a non-starter and you’ll have to stay with your existing lender.

Can a self-employed person be declined a remortgage?

Absolutely. There’s a whole host of reasons why self-employed people could be declined.

But if you’ve already got a mortgage, you can usually conduct something called a product switch. That’s where your existing lender offers you a deal as your existing product is coming to an end. You can select that new deal rather than falling onto an expensive standard variable rate.

Because you’ve already got the loan with them, there won’t be a full assessment – as long as you’re not changing the amount you’re borrowing or the timeframe. There’s a good chance you can do that with your existing lender without any credit checks at all.

How can I better my chances of a good remortgage as someone who is self-employed?

It definitely helps to be prepared. Record keeping is always a big one for the self-employed. That means submitting your accounts to HMRC on time, accurately and declaring all of your income.

Also, keep an eye on bank statements and make sure you’re keeping up with all your other commitments, debts, loans and everything you’ve got to pay each month.

If it’s all paid on time and your conduct is good, that’s going to put you in a really good position when applying to a new lender.

You don’t need a deposit in this instance because you’re remortgaging, but having as much equity in your house as possible is also going to give you more options. The bigger the equity, the bigger the pool of options you’ll have to hand.

What are the benefits of remortgaging?

Remortgaging is where you’ve got a mortgage with a lender and you want to take your business to a new one. You do that for lots of different reasons.

The new lender might be offering you a slightly better rate than your existing lender, therefore bringing your repayments down. You could also take the opportunity to make a change, such as a capital raise.

If you’re looking to draw some money out of your property to do some renovations, you could apply for a larger loan with the new lender. They would pay your existing lender off and the surplus could allow you to achieve those renovation dreams.

Whatever you’re planning, it’s a case of discussing your intentions with a broker and piecing together your best route, whether it be staying with your existing lender or going to a new one altogether. It all depends on what fits best.

What else do we need to know about remortgaging when you’re self-employed?

When you are considering a remortgage, there are a lot of factors to bear in mind. It is well worth going through that with someone.

I guarantee you that if you sit down with a broker that knows what they’re talking about, the outcome will be better than it would be if you tried to do this yourself. It’s worth spending the time on it.

YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR PROPERTY. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.