In the world of mortgage lending, self-employed individuals often encounter unique hurdles when searching for financing. Given the diverse income structures and documentation requirements, selecting the right lender becomes crucial. In this article, we explore the ins and outs of obtaining a mortgage with NatWest, a renowned mortgage provider in the UK, tailored specifically for self-employed borrowers.
If you’re self-employed and eager to explore your mortgage options, don’t hesitate to reach out to us. At Strive Mortgages, we specialize in navigating the complexities of self-employed mortgages, backed by our experienced team’s wealth of knowledge. Feel free to contact us by calling 01273 002697 or emailing us at [email protected].
Understanding Self-Employment –
Self-employment takes on various forms, including limited company directors, sole traders, partnerships, and contractors. NatWest caters to all these categories of self-employment. It’s essential to understand how NatWest defines self-employment, typically considering individuals who own more than 20-25% of a company as self-employed.
Documentation Requirements
Documentation plays a pivotal role in the mortgage application process for self-employed individuals. NatWest usually requires a minimum of two years’ worth of accounts, enabling them to assess income stability and financial health over time.
Income Assessment
NatWest takes a pragmatic approach to income assessment, often averaging the last two years’ profits if they demonstrate stability or an increasing trend. However, if profits are declining, they may rely on the latest year’s figures to ensure a fair representation of financial standing.
For Limited Company Directors
NatWest considers both salary and dividends for limited company directors, cross-referencing this information with the company’s accounts to ensure sustainability.
For Freelancers/Sole Traders and Partnerships
For sole traders or those in partnerships, NatWest typically examines net profit after expenses but before taxes, usually averaging over a two-year period.
For Contractors
Contractors undergo a slightly different evaluation process, with NatWest potentially considering the contract value as a basis for income assessment rather than solely focusing on net profit.
Borrowing Limits
NatWest typically extends income multiples ranging from 4.5 to 5 times income for self-employed individuals. Exceptions can be made based on factors such as income stability and financial commitments.
What rates do NatWest offer self-employed borrowers?
Rates offered by NatWest to self-employed borrowers depend on the timing and loan-to-values, but generally, NatWest is a competitive lender and often offers market-leading interest rates. The rates offered to self-employed individuals are exactly the same as to most other occupation types.
What products are available?
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NatWest offers a wide range of mortgage products tailored for the self-employed, including fixed rates, with the most common options being 2 or 5-year fixed rates, as well as tracker products.
These mortgages are available to various types of borrowers, including first-time buyers, home movers, those looking to remortgage, and individuals interested in buy-to-let mortgages. Additionally, NatWest provides products designed to assist with shared ownership or other government schemes.
Is NatWest the Right Choice?
While NatWest offers competitive rates and efficient processing times, it’s essential to evaluate individual circumstances. Limited company directors retaining 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 NatWest, it’s vital to carefully weigh your options. Seeking guidance from mortgage experts can assist in navigating the intricacies of self-employed lending. At Strive Mortgages, we specialize in catering to the mortgage needs of self-employed individuals. With our experienced team and personalized solutions, we can help you secure the financing necessary to achieve your homeownership aspirations.
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.