In the landscape of mortgage lending, the self-employed often find themselves navigating a unique set of challenges when it comes to securing a mortgage. With different income structures and documentation requirements, finding the right lender becomes crucial. In this guide, we delve into the nuances of obtaining a mortgage with Nationwide, one of the UK’s leading mortgage providers, for self-employed borrowers.
If you are self-employed and interested in exploring your mortgage options, get in touch today. At Strive Mortgages, we are experts when it comes to dealing with self-employed mortgages. We have an experienced team with a wealth of knowledge. Call us on 01273 002697 or email us at [email protected].
Understanding Self-Employment
Self-employment comes in various forms, from limited company directors to sole traders, partnerships, and contractors. Nationwide extends its lending services to all these categories. However, it’s important to grasp how Nationwide defines self-employment. Generally, if you own more than 20-25% of a company, you’re considered self-employed in their eyes.
Documentation Requirements
For self-employed individuals, documentation plays a crucial role in the mortgage application process. Nationwide typically requires a minimum of two years’ worth of accounts. This allows them to assess your income stability and financial health over time.
Income Assessment
When assessing income, Nationwide adopts a pragmatic approach. They typically calculate income by averaging the last two years’ profits if they’re on a stable or increasing trend. However, if profits are decreasing, they may rely on the latest year’s figures. This ensures a fair representation of your financial standing.
For Limited Company Directors
Nationwide considers both salary and dividends for limited company directors. They cross-reference this information with the company’s accounts to ensure sustainability.
For Freelancers/Sole Traders and Partnerships
For those operating as sole traders or in partnerships, Nationwide typically looks at net profit after expenses but before taxes. Again, a two-year average is often the benchmark.
For Contractors
Contractors may have a slightly different evaluation process. Rather than focusing solely on net profit, Nationwide may consider the contract value as a basis for assessing income.
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Borrowing Limits
Nationwide usually offers income multiples ranging from 4.5 to 4.75 times income for self-employed individuals. Exceptions can be made based on various factors such as income stability and financial commitments.
Is Nationwide the Right Choice?
While Nationwide offers competitive rates and efficient processing times, it’s essential to consider individual circumstances. Limited company directors who retain profits in their businesses might find other lenders more accommodating based on profit rather than drawings.
Exploring Your Options
If you’re self-employed and considering a mortgage with Nationwide, it’s crucial to weigh your options carefully. Seeking advice from mortgage experts can help navigate the complexities of self-employed lending. At Strive Mortgages, we specialise in assisting self-employed individuals with their mortgage needs. With our experienced team and tailored solutions, we can help you find the right mortgage for your circumstances.
Contact us today, and we’ll work hard on your behalf to find you a competitive mortgage.
For more information on mortgages for contractors, please contact a member of the Strive team, by emailing [email protected] or call us on 01273 002697.
