Category: Mortgages

Investment property mortgages include various types of loans such as commercial mortgages, buy-to-let loans, and everything in between.

If you’re hunting for info on investment property mortgages, this guide will tell you everything you need to know.

Below, you will learn about what type of finance is categorised as investment property mortgages, how to invest in one, what rates to expect and how to make the right decision for you.

There’s no time to waste let’s jump right in.

What is an Investment Property Mortgage?

Most people apply for a mortgage to buy a personal home – the home of their dreams. But there are scenarios where you might want to invest in property purely for profit.

You might want to spruce up the property and resell it, or you might want to use the property to earn rental income.

You can even include the purchase of property for commercial use. The only exclusion is property bought for personal use.

The category that your property falls under will determine what type of mortgage you will apply for. The mortgages we will cover include:

• Buy to sell mortgages
• Buy-to-let mortgages
• Holiday rental properties
• Commercial property mortgages

While all of these mortgages fall under investment property mortgages, it’s important to note that each of these categories may have subcategories within them.

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Before we move on, let’s first point out that second home mortgages are not the same as investment property mortgages.

Instead, second-home mortgages are properties for personal use; this includes your own private holiday home and secondary residence in which you only intend to spend some of your time.

Investment property mortgages are strictly for people who wish to buy a property they will never inhabit themselves (or their family). The purpose is for the property to generate an income.

While the investment property mortgage may be a second mortgage for you, it is not a second property mortgage for personal use.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

Investment Property Rates vs. Second Home Rates

A residential home of a similar size to a commercial property will come with a lower interest rate.

Why? Firstly, there’s a higher risk to the lender. You won’t be personally inhabiting the property, which means that you’ll have tenants.

And while tenants can be vetted, there’s no guarantee that your tenants won’t miss payments or damage the property. There’s a risk for you and the lender. When there’s increased risk, interest rates increase.

Investment Property Mortgage Options

Let’s consider the options:

1. Commercial Investment Mortgages

If you plan to invest in property that will be used for commercial business, this mortgage type is a good option. There are several criteria for getting a mortgage for commercial property as follows:

• Proof of viability of the earning potential backed by a strong business plan
• Your credit history (some mortgage providers will assist bad credit borrowers)
• Your track record in a similar commercial market
• The deposit – you need to put down a minimum of 25%, but in some cases, as much as 50% is required

2. The Buy-to-Let Mortgage

Mortgage lenders offering this type of mortgage will need evidence of a viable investment from you.

With this type of loan, the lender will determine if you are a viable loan candidate primarily based on the property’s earning potential (usually rental earnings).  Mortgage providers will decide on your application outcome based on:

• Your credit history (some mortgage providers assist bad credit borrowers)
• Income to debt ratio
• The deposit – you need at least a 15% deposit
• Experience as a landlord
• The projected earning potential of the property

If you want to get this mortgage, typically you will need to illustrate that the income possible will cover the mortgage repayments by no less than 125%.

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3. Holiday Rental Properties

These mortgages are very similar to the abovementioned buy-to-let mortgages. To get a mortgage for a holiday property you plan to rent out, the decision will come down to the projected rental income.

Most lenders expect applicants to show that the expected property income is realistic and cover at least 140% of the total mortgage. Holiday rental mortgage providers typically expect deposits of no less than 25%.

4. Buy-to-Sell Mortgages

If you’re a property flipper, then you already know about finance on these. These loans are offered to borrowers who plan to purchase property, spruce it up, and then resell it for a profit.

These are designed to offer much shorter terms, usually no more than a few months or years, depending on the work needed.

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

Expected Rates for Investment Property Mortgages

Here’s the clincher. The interest you pay on a residential mortgage will be less than what you pay on an investment property mortgage.

For example, buy-to-let mortgages may have an interest around 1% higher than a regular mortgage.

That said, each mortgage provider deals with each case separately. The interest rate you’re offered will be determined by the loan’s affordability, credit history, and the amount of money you have available as a deposit.

To get the best rates, it’s important to consider all of your options. Working with a broker can save you time and money as they have the industry know-how to find just the right deal for your needs and financial situation.

The best way to ensure you get the best rates is to make sure you meet all the mortgage qualifying criteria and work on your credit report.

Ensure that you reduce your monthly expenses (debt to income ratio is important), pay your bills on time and in full, and check your credit profile to ensure all the details are correct.

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Are There Other Options

Some borrowers wonder if there are other options they can consider when they wish to buy a property using a mortgage. The following may be worth looking into if you’re trying to raise funds:

• Remortgaging existing property
• Second charge mortgages
• Development finance
• Bridging loans

Tips for Getting a Mortgage for Your Next Investment Property

Of course, each mortgage is different depending on the type of property you want to buy, your intention for it, and your financial situation.

If you’re ready to find a mortgage for your investment property, here are a few tips for getting a mortgage:

• Research, research, research!

Do thorough research into the type of mortgage you want to apply for before you apply. Know the rules, know what documents you need, and familiarise yourself with the limitations. This will save you time and possible disappointment in the future.

• Seek out the help of a broker.

Investment property mortgage brokers will take a lot of guesswork out of the process for you.

They can consider your situation and present you with the best possible options instead of leaving you to wade through the options and taking your chances with possible application rejections.

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Final Thoughts

Investment property mortgages are designed for holiday properties, commercial buildings, and similar.

If you’re looking for funding to buy a property that you don’t intend to personal inhabit yourself, an investment property mortgage might be the right choice for you.

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

If you’re worried that your financial situation will mar your chances of getting the mortgage you’re after, you may benefit from a joint borrower sole proprietor mortgage (JBSP).

This type of mortgage is a breath of fresh air for the first-time buyer, particularly as a family member or parent steps up to the plate, ready to support them financially and co-sign the mortgage with them as a financial contributor.

In this guide, we will cover everything you need to know about JBSP, so you can decide if it’s the right option for you. We’ll touch on the following topics:

• What joint borrower sole proprietor mortgages are and how to use them
• Where you can get JBSP mortgages in the UK
• How JBSP mortgages can be used for tax purposes (stamp duty implications)
• Getting the lowest possible interest rate

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Joint Borrower Sole Proprietor Mortgages – What Are They?

Unless you’re involved in the mortgage industry, you probably don’t know everything there is to know about mortgages, least of all JBSP mortgages.

This type of mortgage enables more than one person to contribute to mortgage debt while just one person’s name appears on the property deeds.

This type of mortgage is often used by families helping each other get their first properties, for tax purposes or to protect assets.

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

If you’re a prospective first-time buyer who is struggling to get approval on a home loan, this may be the option for you, as JBSP mortgages are ideal for borrowers who:

• Have a low income
• Are newly self-employed
• Have no credit history to speak of
• Are very young buyers
• Don’t have a hefty deposit saved

Most JBSP mortgage providers will accept up to four applicants on such a home loan, but keep in mind that most only consider two incomes as a deciding factor on the mortgage approval. If you have bad credit, your co-applicants will need to have good credit and be financially stable.

The approval process on a mortgage application will vary from one lender to the next, but in most instances, lenders are looking for a good credit score, affordability, and financial stability.

Adding an extra source of stable income to your application may be the difference between getting the dazzling home you’ve been eyeing out and staying in that one-bedroom apartment.

This type of loan is a stepping stone for people who want to have only their name on the deed but need a financial helping hand from partners, spouses, parents, or siblings to get property repayments well underway.

Lenders find these types of loans more appealing because co-signatories typically have a higher income to fall back on, or they have savings or a pension intact, making it a less risky option.

Of course, the clincher is that your co-signatories will have to pick up the slack if you can’t make your monthly instalment payment – they will have to pay it for you.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

UK Lenders Offering JBSP Mortgages

Several financial institutions in the UK offer joint borrower sole proprietor mortgages in the UK, ranging from specialist lenders and high street banks to even building societies.

Several lenders offer JBSP mortgages, but with restrictions imposed, so be aware of that.

It’s a good idea to speak with a mortgage broker who specialises in JBSP mortgages who can find the best possible deal with the best home loan provider for you.

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Using a JBSP Mortgage

There are several ways that borrowers can use joint borrower sole proprietor mortgages to their advantage, as discussed below:

• To borrow more

Based on your debt-to-income ratio, there are limitations placed on how much you can borrow as a sole applicant. Most lenders cap their lending at 4.5 times the borrower’s income. If you have 2 to 4 applicants stated in the affordability assessment, suddenly, you can borrow more than if you applied on your own.

What are the Stamp Duty Implications of JBSP Mortgages?

Stamp duties for first-time buyers purchasing a home of up to £300,000 were done away with in the UK in 2017.

This means that if you’re a first-time buyer and apply for a JBSP mortgage and you have never owned a freehold property or have a residential leasehold in the UK (or abroad, by the way), then you can save stamp duties of up to £5,000. This can be put towards the deposit!

Also, if your partner takes out a JBSP mortgage, you can avoid the stamp duty too within the limit.

This means that if you own a property already, but your partner doesn’t, you can put your partner’s name on the property deeds while taking out a JBSP mortgage.

You can be a contributor to the mortgage, but as long as your partner’s name is on the deed and he/she hasn’t owned property before, the mortgage is exempt from the stamp duties.

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

Getting the Lowest Possible Interest Rates on JBSP Mortgages

You won’t notice much of a difference when it comes to interest rates on joint borrow sole proprietor mortgages vs. regular mortgages – they are mostly the same.

However, if there are better deals out there, you will usually come across them with the help of a professional broker. There’s no secret to getting a better interest rate than anyone else.

The best thing you can do is work towards being the type of borrower that lenders want to offer low-interest rates.

Here are a few tips:

• Consider many options so that you have a full scope of the best deals you qualify for – this may require the help of a broker.
• Ensure you have a decent credit history (pay your debts on time and in full).
• Apply for a JBSP mortgage with contributors who are financially stable and have a sound credit history.

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Final Thoughts

Joint borrower sole proprietor mortgages may not be for everyone, especially those who want the names of all parties to appear on the property deeds.

However, for those just getting into the property market and those who have poor credit, want to save on stamp duties, protect their property, or just can’t get home loan approval, the JBSP mortgage is a great option.

It is always advisable for all parties on the mortgage to seek Independent financial advice before entering into a mortgage or similar contract.

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

One discouraging factor about mortgages is the length of time it takes to pay one back.

The excitement of investing in the perfect home can dwindle under the knowledge of the 25-40 long years of repayments that stretch out before you.

A mortgage isn’t a short-term thing – it’s somewhat of a life-long commitment.

If that has been a financial phobia for you, you might want to explore short-term mortgages. Yes, they do exist.

What is a Short-term Mortgage?

In contrast to its long-term counterpart, which you can pay off over 25 to 40 years, short-term mortgages range between six months and five years.

And you will find that the length of the mortgage will vary from one provider to the next.

Lenders impose their own minimums, which can be anything from no minimum to as much as 15 years.

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Short-Term Mortgages vs. Long Term Mortgages

Here’s a brief look at how short-term and long-term mortgages stack up against each other.

Short-Term Mortgages:	Long-Term Mortgages:
Less interest over the term	More interest due to the long term
High monthly instalments	Low monthly instalments
Pay off the mortgage quickly	Saddled with debt long-term
Fluctuating interest rates (may rise)	Less affected by interest rate changes

The Allure of Short-Term Mortgages

Short-term mortgages are undeniably alluring for many reasons, which are listed in brief below.

1. Quick Ownership

For some, there’s a sense of urgency when it comes to owning a property. No one really wants to be saddled with debt for the rest of their lives, but it’s about more than that.

With a short-term mortgage, you’ll be able to pay off more monthly, leading to the loan being paid off quickly and the property ownership a lot quicker too.

Then there’s the matter of interest. The longer the loan term, the more interest you pay. While a short-term mortgage may cause you to pay a higher amount each month, it relieves you of the cumulative cost of a long-term loan.

Mortgages that stretch over 25 years or more may require smaller monthly instalments and interest costs, which aggregate into a large total at the end of the term.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

2. The Feeling of Running Out of Time

A person’s age may make the concept of a long-term mortgage unappealing.  Not only will the loan run well into old age and present a financial strain on a limited retirement budget, but retirees or near-retirees pose a higher risk to lenders than actively working and earning individuals.

Lenders will find the prospect of lending money for a few years far more viable than giving a hefty lump sum to someone who is recently retired.

3. Delaying the Sale of Existing Property

When getting a new mortgage, there’s the pressure of having to sell your existing home before you get into another long-term mortgage. With a short-term mortgage, you can start paying off your new property while waiting for your existing property to sell. There’s no immediate rush.

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Qualifying Criteria for Short-Term Mortgages

Eligibility for a short-term loan will typically require you to meet with the mortgage provider’s specific terms.

These terms can change from one provider to the next, but the following factors are generally considered during the decision-making process. Not all lenders offer short terms.

• Affordability (this involves comparing your monthly income vs. expenses)
• Credit history
• Current earning bracket

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

The Complexities of Getting the  Best Short-Term Mortgage Rates

Getting the best short-term mortgage rates in the UK depends on your unique financial situation.

It’s important to note that while each lender has its own terms and conditions in place, you may receive different mortgage deals and offers from different providers.

You won’t struggle for lenders if you’re considered a favourable candidate by meeting all the qualifying criteria.

If you’re earning enough money, have a good credit history, and can prove affordability, you will undoubtedly get better interest rates than poor credit borrowers.

If you happen to have poor credit, it doesn’t necessarily mean that a short-term mortgage is off the cards for you.  Mortgage providers will consider your unique financial situation before coming to a decision.

If you’ve got poor credit but can afford to repay the monthly instalments, you may still find that lenders are willing to provide you with the loan.

The options will most likely be limited, and the interest rates will be considerably higher than someone with excellent credit and better affordability.

That said, there are always options out there, and by using a broker, you may find the ideal short-term mortgage for you.

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Types of Short Term Mortgages

Typically, a short-term mortgage requires that you pay a higher monthly sum over a shorter period. In this section, we examine different short-term mortgages and what they mean for you:

Short-Term Fixed-Rate Mortgage

Getting a fixed rate short-term mortgage will largely depend on your credit history and your overall financial circumstances. With these mortgages, the interest rate you pay will stay the same for two, five, or ten years.

Short-Term Offset Mortgage

In an offset mortgage, the loan is linked to your savings account. The interest due is calculated by deducting the amount in your linked savings account from the mortgage balance. As a result, completing payments in an offset mortgage is relatively quick.

Short-Term Tracker Mortgage

Tracker short-term mortgages are a type of variable mortgage following an external interest rate. In most instances, a mortgage provider will use the same base rate as the Bank of England and then determine the interest rate they will offer borrowers.

Mortgage providers may also add or deduct a percentage of interest on top of this. Tracker mortgages aren’t for everyone, and it’s best to understand that if the Bank of England’s base rate increases, your mortgage rate could increase too.

Benefits of a Short-Term Mortgage

Short-term mortgages offer borrowers some great benefits, which are listed below.

Short-Term Mortgages are Flexible

Unlike long-term mortgages, where you are open to future financial risks, short-term mortgages allow you to pay the amount back quickly.  Interest Rates

Interest rates are a big factor in a mortgage – the amount of interest you will pay on a home is substantial – there’s no getting around it. That’s what makes short-term mortgages so attractive.

If you’re in a fixed-rate mortgage, you will lose out when the interest rates drop, but if you’re only paying a short-term mortgage over two to three years (which is typical), the interest rate is less of a worrying factor than if you’re paying off a loan over 25 to 40 years. Shorter mortgage terms translate to less interest paid on a property.

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Last Word

It’s important to note that mortgages, short-term or long-term, are considerable financial commitments, and you shouldn’t blindly walk into one.

Always consider your options and chat with professionals in the field to ensure you’re choosing the mortgage option that’s best suited to your financial situation and affordability.

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

Don’t worry if you’re ready to purchase your new home but have been surprised that the lender is withholding some of the promised funding – this is just a temporary thing and is called “mortgage retention.”

Although the term “mortgage retention” feels intimidating, you can still buy your dream home.

Below you will find a complete guide on what mortgage retention is, how it impacts your ability to buy a property, and the impact it can have on your mortgage application.

What is Mortgage Retention?

Mortgage retention occurs when a lender approves the loan but does not release all the money right away. Instead, a portion of the funds is held by the lender until specific criteria are met.

A lender typically offers this when their valuation survey reveals that the property needs some work to match its condition to the current asking price.

However, that is only required mainly for structural issues, not minor repairs.

If the lender imposes mortgage retention, the buyer must find other ways to access the retained money. Sometimes the vendor may get the work done.

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 Mortgage Retention Survey

The process of buying a house requires surveyors to conduct a valuation to determine whether the property’s value matches the listing price (this is called state value). Mortgage lenders use the results of this valuation survey to decide how much you can borrow.

Lenders sometimes accept the value of a house in principle but then impose mortgage retention after the survey is complete. The mortgage retention ensures that the property provides adequate security for the loan.

This isn’t a bad thing, but it can feel like a bad thing to you when you’re faced with the challenge of purchasing a home with less money than is needed.

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

The catch

You must make up the difference if you decide to carry on with the purchase even after the mortgage retention. The difficult part is that you will need money to complete the necessary work.

In most cases, the amount retained depends on how much value the work will add to the house.

If, for instance, fixing a leaky roof would increase a property’s value by £5,000, the lender could offer a mortgage with a £5,000 retention. The amount will be credited to your account once the new roof has been installed.

Possible Solutions

You might be wondering if there’s a solution. How can you get the sale to go through with retention that’s withholding funds?

One thing to consider is that the seller might be open to negotiating to a lesser selling price or they will get the work done.

You may be able to renegotiate the mortgage retention with the lender if you find a contractor ready to begin the work as soon as the home purchases are complete as specialist reports may indicate a lower cost of works.

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

Common Causes for Mortgage Retention

Damp and mould are common causes of mortgage retention. Mortgage retention amounts and work required to rectify the issue will ultimately depend on how severe the problem is.

There are other reasons for a lender to retain your funds, such as:

• Structure defects
• Electrical rewiring
• Asbestos removal

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What is a 100% Retention Mortgage?

In some cases, a surveyor might recommend a 100 per cent mortgage retention until the property’s issues — often structural — are fixed.

For example, you may come across full mortgage retention if the property you are about to buy needs significant renovation. A lender may not consider releasing funds to a property that is utterly uninhabitable in its current condition.

Before you buy a house that has significant issues, it’s recommended that you do a full structural inspection.

If your lender imposes full mortgage retention, this will likely keep happening to other potential buyers who try to purchase the same property.

However, if the seller cannot sell the house under current conditions, you can negotiate with them. Also, seek expert advice and weigh all pros and cons before making a decision.

In case you decide against purchasing the property, you may withdraw your mortgage application.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

 Mortgage Retention

Your lender will conduct an affordability assessment and check your credit history, employment status, and other factors to determine your eligibility.

Once that’s done, they will review the results of legal searches and the valuation report.

As mentioned before, if that valuation report shows significant issues to the property, the lender will issue an offer of advance listing all conditions for the mortgage, including the portion retained.

Lenders may:

• Provide the total mortgage sum when you buy the property if specific work is completed within a specified timeframe.
• Initiate only part of the loan and pay off the remainder after the work has been completed.
• Retain the entire mortgage pending a structural engineer’s report.

Getting to the next step in the mortgage application process will require you to accept.

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

The letting market over recent years has developed not only by covering medium-term property rentals via estate agents but also via online platforms such as Airbnb.

If you are interested in exploring this area of the property rental market, you may wish to find out what the financial options could be for purchasing a buy to let within this sector.

If so, this article may be of interest, as we will be discussing the financing options for buy to let properties and other considerations that may need to be reviewed.

Can a Mortgage be Obtained on a Property That is Planned to use Airbnb to Generate Rentals?

There are buy to let mortgages available on the market that allows the mortgage holder and property to become Airbnb hosts within the UK, however, there are a number of considerations that need to be thought through before approaching a lender including:

• Will the entire house be available for let via Airbnb or just certain rooms?
• Is the property already within a fixed mortgage term? If so, permission from the current lender is likely to be required in order to offer the property or even part of it for let.
•  What proportion of each year will the property be available to rent via Airbnb?

The answers to the above questions will be useful in order to establish which type of mortgage would be most suitable.

Find a mortgage

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

Would I need a Buy to Let Mortgage for an Airbnb Property?

Often a buy to let mortgage is the most appropriate type of finance when renting out a property via Airbnb or any other platform.

Buy to let mortgages are specifically targeted at those who plan to let out a property, rather than live within it.

Some lenders will set specific time durations that they will allow a property to be let via Airbnb such as 90 days or even up to six months, however, any such limits would be set out within the mortgage terms.

There are various different types of buy to let mortgages available on the market, however, most investors will prefer interest-only mortgages, which keep the monthly repayments down as only the interest is due each month, leaving the capital balance remaining at the end of the mortgage term

Each lender will set their own lending criteria and mortgage terms for their buy to let mortgage products, and therefore some enquiries will be required and a comparison exercise was undertaken before proceeding with an option.

In a very few circumstances, commercial mortgages may be appropriate for Airbnb rented properties however often these would be for established landlords with a large property portfolio.

Should you have a specific query in relation to the type of mortgage that would be most suitable for your Airbnb venture, please do get in touch with our expert team of brokers to make an appointment.

Could I use my Existing Mortgage if Renting my Property via Airbnb?

As briefly mentioned, there must be a conversation with the current lender regarding any plans to let out the property, as without permission any rental could be a breach of the current mortgage terms and conditions.

If the current lender agrees to enable a switch to a buy to let mortgage, this could be the simplest option to facilitate prompt Airbnb rentals, however, be aware that this option may not provide the most competitive terms.

Should the mortgage lender decline the switch request, or if you wish to explore the mortgage market anyway to find the best deal available, be aware that the current residential mortgage may have early redemption penalties within the terms and conditions.

In order to explore both of these options, please seek advice from an independent financial advisor or mortgage broker who would be best placed to advise and explore the whole of the mortgage market.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

Can I Utilise Rental Income towards my Monthly Mortgage Repayments?

Airbnb rental income can possibly be used to cover the monthly mortgage repayments however it would depend on the circumstances.

Most lenders would require proof that income levels exceed the mortgage repayments in order to cover other costs such as property maintenance, fees to the Airbnb platform, insurances and any applicable taxes.

Each lender’s criteria may vary however most would require a record of rental income for a minimum of two years, as well as the standard vetting of potential mortgage applicants to ensure that other income is available to meet the mortgage repayments.

How can I Obtain the Best Mortgage Rates for Airbnb Properties?

As with the standard mortgage market, the best mortgage rates and terms are often reserved for those with a strong credit rating, large deposits and those who comfortably meet the affordability checks.

However, in addition to these elements, lenders willing to offer mortgages for Airbnb properties will also need to be satisfied that sufficient income levels can be achieved from the property and Airbnb platform.

How can I Access an Airbnb Suitable Mortgage?

Due to the specialised nature of an Airbnb mortgage, we would strongly advise that a mortgage broker is used in order to locate the most suitable mortgage product for the circumstances as well as finding the most competitive rate and terms by searching the whole market.

Mortgages for Airbnb Properties Summary

In this post, we have explored what Airbnb mortgages are, when they may be suitable and how a buy to let mortgage differs from a standard residential mortgage.

There are many factors to be considered before rushing into renting a property in addition to the financial product required such as the likely rental income that could be achieved as well as the other costs including the property maintenance, landlord insurance and commission fees due to Airbnb.

Also as briefly mentioned, the mortgage holder would also need to consider tax planning both on the initial investment of the property and the income generated from the rental.

Business planning would need to be undertaken in order to plan for the long-term success of the venture, as well as for settling the capital at the end of the mortgage term if an interest-only mortgage product is selected.

For more information on any of the matters covered within this article, please do get in touch with our friendly team.

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

It can feel like there are many hurdles to cross in order to obtain a mortgage these days, especially following the UK’s financial crisis in 2008, which resulted in a number of lending rules being tightened up, and extra requirements that applicants must meet.

Each stage of the process can often be simplified and overcome, however, there are a number of common potential larger issues that may halt the progress of obtaining a mortgage.

In this guide we will discuss the common issues that can cause a mortgage application to be declined at worst, or even if the application is approved, the impact could be a significant cost increase of the financial product due to the lender considering the factors as increasing the risk of lending.

If any of the matters discussed could be relevant to your personal situation, it is highly recommended that independent financial advice is sought ahead of making a mortgage application in order to protect your credit record.

The Common Issues That Could Stop An Applicant Obtaining a Mortgage

High street lenders in particular can be very selective regarding the applicants that they are willing to accept for mortgages.

The factors below are the most common reasons as to why a mortgage application could be declined in the UK:

Deposit Too Low

Post financial crisis, the high loan to value mortgage products were mostly removed from the market and since then, potential mortgage applicants will often require at least a 10% deposit which can be quite a task due to the increasing trend of property prices over the past few years.

The best mortgage rates available will be reserved for those with a higher deposit and therefore a lower loan to value percentage rate.

If the mortgage applicant does not have a sufficient deposit for the specific mortgage that has been applied for, the application may be declined or if the lender is willing to make an offer, the terms are likely to be very different to those advertised.

However, there may be other options if the mortgage applicant does not have a sufficient deposit including a guarantor mortgage or providing a different type of asset as collateral with a specialised lender.

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Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

Failing Affordability Checks

As briefly mentioned within the introduction, following the financial crisis, a number of additional checks were brought into the mortgage application and underwriting process including affordability checks.

Lenders are now obligated to ensure that potential mortgage applicants can both afford the mortgage they are applying for within their current personal circumstances, as well as applying a ‘stress test’ in order to check that an applicant could afford the repayments of a chosen financial product should interest rates rise.

Bad Credit History

A history of bad debt can impact a potential mortgage applicant’s ability to obtain a mortgage, however, each negative scenario could have a different level of impact on an application.

For example, previous property repossessions or bankruptcies would be a severe issue for an applicant if the incident occurred within the past seven years.

However, some lenders may assess even more minor offences such as late financial payments as high risk as they could be deemed as mismanagement of personal finances.

Should you have a history of bad credit, it is highly recommended that a specialised mortgage broker is approached in order to assess the impact on your credit record and the ability to obtain a mortgage.

Brokers can also advise which lenders are more likely to assess a mortgage application from an applicant with a bad credit history, as well as advising methods of improving your current position ahead of an application for the best chances of success.

Self-employed without proof of Income

Another common issue facing those potential mortgage applicants who are self-employed is to obtain sufficient proof of income in order to support their mortgage application.

Often lenders require a minimum of two years’ worth of accounts to prove self-employed income, which can be a hurdle to those who have not been trading for that long.

If you are self-employed without the necessary financial records to provide proof of income to a lender, it is recommended that advice is sought from a mortgage broker who can seek specialised lenders who are willing to access levels of income via other methods.

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The Property Doesn’t meet Lender Requirements

There is a range of properties that do not meet the criteria of typical lenders and therefore a mortgage will not be offered in those cases.

Properties with a flat roof, history of subsidence or flooding, or that have non-standard construction are often deemed riskier to lenders and therefore a specialised lender would be required.

Specialised lenders are accessed via the use of a mortgage broker who can access the whole of the market.

Age Restrictions

Many lenders have both minimum and maximum age limits that they are prepared to lend to. If you are a more mature potential mortgage applicant it is highly recommended that the terms of the lender are checked before making an application.

Should you require a mortgage and are approaching retirement age or have already retired, you may require a specialised lender.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

What Stops You Getting a Mortgage Summary

We have discussed throughout this article the common factors that may impact potential mortgage applicants obtaining a mortgage via mainstream methods including a low deposit, history of a bad credit record or not having sufficient proof of income.

Whilst there are some lenders on the market that do appreciate unique personal situations and properties, commonly there are not found on the high street or from mainstream lenders and therefore a specialised lender may be required.

Therefore, if any of the scenarios are familiar to you, it is highly recommended that the use of a specialised mortgage broker is sought ahead of making any applications.

This will allow tailored advice to be received and that the whole of the mortgage market can be searched to find the most appropriate financial product at the most competitive prices.

Brokers can also assist in preparing an application as well as liaising with the lender through the process, which can ease the stress of the process.

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

The term non-standard covers many things, however typically, the terminology is reserved for those properties that are not made of the standard bricks and mortar.

In this post, we will discuss the various types of financial products that can be used to purchase properties or develop properties in some circumstances, and the application process in order to obtain a non-standard construction mortgage.

What is a Non-Standard Construction Mortgage?

A non-standard construction mortgage is a specific financial product that enables the purchase of a property that is constructed with materials other than bricks and mortar, has a tiled roof and concrete foundations.

Typical elements of a non-standard constructed property are as follows:

• Thatched roof properties.
• Properties with steel or timber frames.
• Single brick constructed properties.
• Prefab properties are made of concrete.
• Listed properties.
• High rise flats.

The above is not an extensive list, however, provides some examples of properties that are deemed as ‘non-standard’ for the purchases of obtaining a mortgage.

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Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

Can a Mortgage be Sought on an Unusually Constructed Property?

Although there are a number of specialist lenders that offer non-standard construction mortgages, it is assumed that non-standard property types are riskier and therefore finance options can be limited.

Each lender will have their own process in order to assess the construction of the property, the property’s current condition, value and the risks involved with lending on a non-standard property, and therefore the application process can be more complex than that of a standard mortgage against a typical brick and mortar property.

What Should be Considered in Relation to Non-Standard Construction Mortgages?

There are a number of factors that should be considered before opting to purchase a non-standard property as follows:

•  The Property Maintenance – With non-standard properties there could be specialised maintenance or treatments that are required, for example, a thatched roof requires regular inspections in order to monitor the condition it and the roof ridge will require replacing every eight to ten years, with a full thatch roof replacement often required around every thirty years.
• Insurance – Building insurance for non-standard properties may also be expensive and therefore specialised insurance brokers may be best placed to find the most competitive deals.
• Re-selling ability and price – As we have discussed, there are additional factors to be considered when deciding whether to opt for a non-standard construction mortgage and the ability to re-sell the property could be hampered due to the specialist nature of the property, as not everyone will be prepared to jump through the extra hurdles.
• The Valuation Report Findings – Lenders who do not have a set process for reviewing non-standard construction properties may rely on the comments within the valuation report and therefore this can result in delays while the lender analyses the report findings or, requests further surveys or information.

There also may be scenarios where a potential mortgage holder would seek to convert a non-standard property in order to obtain a standard mortgage.

This could involve reinforcing steel frames, for example, however, any improvements would require certified companies to be used in order to provide the relevant evidence to the mortgage company.

Should this scenario be of interest, it may be worth seeking the advice of a mortgage broker as the initial finance to purchase the non-standard property and undertake the building modifications may be undertaken via a range of finance options.

Other than a non-standard construction mortgage. Examples of more flexible, short-term, cost-effective borrowing for such purposes could be construction finance.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

Non-Standard Construction Mortgage Application Process

The application process for a non-standard construction mortgage will often vary between lenders, on a case-by-case basis.

As we have briefly mentioned, the lender will undertake due diligence on the property to establish the current construction and the levels of risks of granting a mortgage on a non-standard property.

Due to the nature of the non-standard property type, each case will usually be unique and therefore will take additional time to manually analyse as well as requesting further details if needed such as further professional advice or valuations or details of the development plans if changes are proposed.

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As with standard mortgages, the lender will also require details of the applicant’s personal circumstances, financial background and in some cases, their experience within the building and construction industry, in order to complete the necessary background and credit checks.

Due to the complexity of non-standard construction mortgages, the timeframe to undertake the underwriting process may be a lengthy one.

Therefore potential mortgage applicants may find that using a mortgage broker is beneficial as the broker can provide assistance with the application and advice throughout the process.

Mortgage brokers can also review the entire mortgage market in order to find the potential mortgage applicant the most competitive deal for the right financial product to suit them, as well as advising which lenders would be most suitable for the type of non-standard construction property that the mortgage is due to be associated with.

Advantages of Non-Standard Construction Mortgages

The main benefit of a non-standard construction mortgage, (once the lender has been pinpointed for the type of property), is that the lender will have knowledge of the specific non-standard construction market.

Therefore would understand the common hurdles of obtaining a mortgage and would have processes in place in order to obtain the relevant information quickly to assess the mortgage application.

Alternatives to Non-Standard Construction Mortgages

There is a range of other borrowing methods available instead of non-standard construction mortgages such as bridging loans, or more flexible construction loans.

However, the most suitable type of finance product will likely depend on the condition of the property, any plans to develop it and the duration of time that the mortgage holder is planning on owning the property for.

For further information on which type of finance would be most suitable for your requirements, please arrange an appointment to discuss your personal situation with a specialised mortgage broker.

Non-Standard Construction Mortgage Summary

In this post, we have explored what Non-Standard Construction mortgages are and when they would be most suitable to a mortgage applicant.

Such financial products are rarely found on a typical high street and therefore are usually accessed via a specialised broker.

Brokers can search the whole of the market in order to obtain the specific financial product required at the most competitive borrowing terms and interest rests.

Should the property you are interested in have a non-standard construction, please get in touch with our friendly team to review the finance options available.

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

The mortgage interest rate attributed to your mortgage product is one of the most important factors to consider when selecting a deal, however, despite mortgage terms being up to 35 years in some cases, the mortgage holder is not bound to the initial rate for the duration.

In this guide, we will be outlining exactly what the initial rate is and the options to find and switch to another mortgage deal.

What is the Initial Rate?

The initial rate is the interest rate set by the lender for the introductory period of a mortgage or other loan.

The rate offered will depend on a number of factors including:

• The Bank of England base rate at the time of the loan application.
• The applicant(s) personal circumstances.
• The applicant(s) credit score and credit history.
• The lender’s selection criteria and any available offers.
• The duration of the loan term.
• For mortgages, the amount of deposit that the applicant can put down will also impact the rate offered.

Often the initial rate on a loan is lower than the Standard Variable Rate, however, it is important to compare all the elements of the loan terms against other products before choosing as usually loans with low initial rates can have hefty products or application fees applicable.

There are various free tools available online to calculate how much can be borrowed, typical monthly repayments, interest rates and how the mortgage term can impact the repayments, however, these should be taken as a guide only as the tools cannot factor in the applicant(s) personal circumstances.

For more tailored advice, it is highly recommended that mortgage advice is sought before making any loan applications in order to find the best deal for the applicant, as well as checking suitability and eligibility before making an application, which if declined, could impact the applicant’s credit score.

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Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

Why do Lenders advertise Initial Rates?

Initial rates are offered by lenders in order to compete with each other within an increasingly crowded market, however, the UK has strict rules of how mortgage products can be promoted, and the applicants vetted.

The Financial Conduct Authority (FCA) regulate mortgage lenders and have rules in place to ensure that the promotions for initial rates are clear, fair and do not mislead customers.

Initial rates are provided to enable the choice to the consumer so that after the initial term, the mortgage holder can either switch to another mortgage product with the same lender or seek a new mortgage deal with another lender.

What Happens When the Initial Rate Comes to an End?

Once the initial rate is over, it is common practice for lenders to switch the loan over to their Standard Variable Rate (SVR) which can prove to be an expensive move for the customer.

The SVR set by the lender is often linked to the Bank of England base rate, however, the SVR can sometimes be over twice the lender’s typical fixed interest rate.

Therefore, it is highly recommended that mortgage holders are aware of when their initial rate is due to come to an end and independent mortgage advice approximately 4 months ahead of this date to ensure that there is plenty of time to discuss the options available and to research the current market conditions.

How to Compare Mortgages

As briefly mentioned, it is wise to browse the market for a new mortgage around 4 months ahead of the end of any current initial rate or fixed period.

One method of comparing the mortgage offers is to review the Annual Percentage Rate of Charge (APRC), which is a calculation of the total cost of the mortgage product including any initial rates and any other fees attributed to the mortgage over the full term of the mortgage.

This rate, shown as a percentage enables a simplified method of comparing multiple mortgage offers, taking into account all of the additional costs.

However if a mortgage holder would like any further support, they can approach a mortgage broker.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

What is the Current Market Position for Mortgages?

The UK is currently in an extended period of very low base rates set by the Bank of England.

Following the global financial crisis commencing in 2008, the UK interest rates dropped from around 5%, to 0.5% in stages over a six-month period in an attempt to aid the economy during the recession.

There was very little change in the Bank of England’s base rate between 2009 and 2018, following which tiny increases were applied, taking the rate to 0.75%.

However, this minor recovery was soon halted by the worldwide coronavirus pandemic, which has resulted in the Bank of England dropping the base rate to a record low of 0.1%.

Such low Bank of England base rates, set during the pandemic have finally filtered through into mortgage offers, leading to a very competitive mortgage market as banks and lenders, compete to offer very low-cost deals to specific customers.

Mortgage holders looking to remortgage or those potential buyers with large deposits could find the current conditions very favourable indeed as some mortgages are available at under 1%.

However, there are some caveats as some lenders are not accepting those applicants who are on furlough or received self-employed grants during the coronavirus pandemic and therefore it is increasingly important to establish full details and any exceptions before making a loan application.

Initial Term Cost Summary

In this post, we have explored what initial rates are and what happens when these promotional rates end.

We have also briefly covered the importance of comparing mortgage options using the Annual Percentage Rate of Charge in order to establish the entire costs of a mortgage.

We also took a look at the current mortgage market conditions and the impact that the pandemic has had, as well as implications for those who required financial support during the past eighteen months.

Should you require any further advice in relation to your remortgage options, please do get in touch with our friendly and knowledgeable team.

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Although it is not impossible to get a mortgage on a low income, there may be some difficulties and additional challenges involved.

Potential lenders will need to be comfortable that a mortgage applicant can comfortably meet the monthly repayments before approving a mortgage and therefore the level of income and affordability is critical to the approval process.

Further to their internal checks and processes, lenders are also bound by UK lending regulations that require lenders to obtain proof of earnings as part of the mortgage underwriting process.

Should you be seeking a mortgage on a low income, it would be highly recommended to approach a specialised mortgage broker for all financial options to be reviewed ahead of making a mortgage application.

However, in the meantime, in this post, we will explore the options for obtaining a low-income mortgage as well as discussing some other considerations that may need to be reviewed along the way.

Can I get a Mortgage on a Low Income?

The short answer is yes, it is possible to get a mortgage on a low income, however, there are many factors involved, the total value that a lender is prepared to offer and whether or not the amount will be sufficient to purchase a property within the local area of the applicant’s choosing.

There are many variables that will impact the total amount that a mortgage lender will offer to loan depending on; an applicant’s personal circumstances, the mortgage product chosen including the term of the mortgage, the interest rate, the property value and the value of the deposit.

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Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

As briefly discussed, lenders are required to determine the affordability of applicants as part of the mortgage underwriting process including ensuring that an applicant can comfortably cover the mortgage repayment as well as their household bills and other expenses.

Also, lenders will apply a ‘stress test’ to ensure that applicants could still afford the monthly repayments if their circumstances change or the interest rates were to rise.

In addition to these regulatory checks, mortgage lenders will also have their own borrowing criteria that assess mortgage applicants on other elements such as their credit scores and age.

Each mortgage lender will have different lending criteria and therefore it is recommended that in order to obtain an insight into which lenders would be the most appropriate, seek advice from an independent mortgage advisor

What Types of Income can be used for a Mortgage Application?

Each lender will have different criteria of what types of income they will accept. Some may accept child support or disability benefit whereas others may not.

In addition, if you are self-employed, you may face further challenges as some lenders may not accept low-income self-employed applicants.

What Documentation Can I use to Prove my Income?

You may already be aware that during a mortgage application and underwriting process the applicant will need to provide proof of their income in order for the mortgage application to be reviewed.

In order to do so, documentation will need to be supplied as part of the mortgage application. There are a number of different ways that an applicant can prove their
prove income including by submitting copies of:

• Bank statements – commonly three months are required
• HMRC documents including SA302 forms
• Letters from employers including offer letters
• Payslips – commonly the last three months are required and/or P60s
• Self Employed accounting documents

How do Mortgage Underwriters Verify an Applicant’s Income?

Lenders will undertake an underwriting process in order to verify the details provided within the application, as well as scoring an applicant against the lender’s internal lending criteria.

The process will vary between lenders including what elements are automatically completed, what details are manually checked and scored and how long the process takes on average.

When lenders complete their underwriting they are reviewing:

• The income details provided in the application are supported by evidence
•  Stability of employment
• Affordability checks
• Other personal circumstances including details of financial dependents
• The credit history of the applicant
• The level of deposit and the source of funds
• The property related to the mortgage application

As you can see there is a thorough checking and verification process undertaken by lenders and therefore under no circumstances should an applicant provide false information as it will likely get discovered by the lender and the applicant could be charged with fraud.

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

What Assistance is there for Low-Income Mortgage Applicants?

There is a range of government schemes that a person with a low income may be eligible for such as:

• The Help to Buy Scheme – A scheme that provides an equity loan of up to 20% towards the cost of the property while enabling the purchase of a property with only a 5% deposit.
• Right to buy Scheme – A scheme that provides the right for council tenants to purchase their council home at a discount.
• Shared Ownership – A scheme that enables the part purchase of a property, where the remaining proportion is rented from a council or housing association. There is often the ability to buy further shares of ownership later.

How to Get a Mortgage on a Low Income Summary

In this post, we have discussed the process of obtaining a mortgage on a low income including the documentation needed.

It is worth noting that the total value that a mortgage lender will be prepared to lend will vary depending on a range of factors including personal circumstances, credit history, loan to value rate and age, in addition to the current low-income situation.

Should you wish to discuss your current circumstances and what mortgage options may be available to you, please contact us today to arrange an initial consultation with our mortgage advisors.

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

If you are self-employed, you may be aware that you will need to prove your income levels during a mortgage application or underwriting process, in order to be approved.

There are a number of ways to do this, however the most common is by requesting an SA302 form.

In this post, we will discuss one method of meeting the lending requirement of proving income.

Why Do I Need to Prove my Income?

The lending rules were tightened up after the UK’s financial crisis in 2008, and lenders need to assess income levels and applicant’s affordability as part of the mortgage application process.

Also, some lenders use multiplying factors in order to calculate how much they are willing to lend a mortgage applicant and therefore without documented proof of a total annual salary, this calculation cannot take place.

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Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

What is an SA302 Form and How do I Get One?

Also known as a tax calculation, this is a formal document created by HMRC that provides an overview of an individual’s tax calculation for one tax year, created from the details provided within a self-assessment tax return.

The summary document includes all taxable income streams and tax liability and is made of two elements documenting both:

• A tax calculation for the relevant tax year, summarising the self-assessment including the total declared earnings and tax payable
• A tax overview, indicating the status of the tax payments

The summary document is also known as a Tax Calculation Form and is the most sought-after proof of income for a self-employed person, suitable for mortgage applications.

Unfortunately, HMRC no longer issue SA302 forms and therefore in order to obtain a form you would need to either request a copy via the HMRC website or call and request one to be sent in the post.

Bear in mind that if requesting a form to be posted, it can take up to two weeks for this to be received, therefore if you have access to the website it is quicker and easier to print the form yourself, which can be found under within your HRMC online self-assessment account under the section ‘more self-assessment details’.

If you use an accountant, they can also access this area to download a form on your behalf.

Another method that accountants can use to calculate a summary of annual earnings is by producing a summary directly from their commercial software used to perform the self-assessment tax return on your behalf.

Such documents may need to be certified by the accountant in order to be accepted by a lender, therefore it is worth discussing the documentation requirements with the potential lender before submission.

The timing of the request (and mortgage application) will be key as the self-assessment for the relevant tax year must have already been submitted in order to request an SA302 form. The deadlines for self-assessment submissions are as follows:

• Paper submissions must be submitted on the 31st October following the end of the previous tax year
• Online submissions are due by the 31st January following the end of the previous tax year

In addition, before contacting HMRC it would be worth asking the potential lender (or independent broker if using one), how many years’ worth of proof of income is required for the underwriting process for the specific lender.

HMRC have SA302 forms available on the website 4 years’ worth of forms (if the applicant has been self-employed for the duration and submitted annual self-assessments).

It is also worth noting, that even if you are employed with PAYE income but also have other earnings, an SA302 form may be useful to obtain to demonstrate your total income to a potential lender.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

Do I need an SA302 for a Mortgage Application?

As discussed, mortgage lenders require proof of earnings in order to process an applicant’s mortgage application and the most simple way to provide proof of earnings for a self-employed person is via an SA302 form.

Some lenders will require both elements of the Tax Calculation Form for their underwriting purposes whereas others will only require the tax calculation part of the document, therefore it is worth checking before making an application, to avoid any delays during the process.

It is also worth noting that it has been known for lenders not to accept a self-printed SA302 form. HMRC have published a list of lenders that do accept self-printed SA302 documents available to review here.

What Other Ways can I Prove my Income?

Should your SA302 document not be ready due to the timing issues or if the applicant has not been self-employed for the duration of the tax year, another method to prove income may be required.

There are a number of different documents that can be submitted in order to prove income including:

• Bank statements
• Tax Returns
• Letters from employers including offer letters
• Payslips
• Self Employed accounting documents

How to get your SA302 Tax Calculation Summary

There are strict regulations within the UK that lenders must abide by, including requiring proof of income from mortgage applicants in order to assess their suitability and affordability for the financial product.

In this post, we have discussed the documents that can meet the requirements of proving income, especially for those self-employed.

If you are self-employed, it is highly recommended that you approach a specialised mortgage broker to assist with reviewing your personal circumstances and suitability of financial products ahead of making any applications.

Brokers can search the whole of the mortgage market to find the most appropriate financial product, with the most favourable terms, which can save the applicant money too.

Once ready to make a mortgage application, brokers can review your documentation to ensure that everything is prepared and organised, meeting the requirements of the mortgage lender in order to avoid delays.

As with any financial decision, it highly recommended that independent financial advice is sought before committing, to ensure that all terms are fully understood and that the repayments can be made comfortably.

As with any secured lending, the ultimate consequence of defaulting on the loan could mean that the property is repossessed by the lender.

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.