Bram Vis answers your mortgage questions
I have a number of sources of income. Am I self-employed in terms of proving my income for mortgage purposes?
I get asked this all the time, from people who mainly work for a company, but also have a little bit of self-employed income and a bit of rental income as well – either from a standard BTL or from Airbnb. Panic not, this is entirely standard. The reality is – income is income, is income, is income.
Income that you receive in cash and don't report – that is illegal. Income that you receive in any other way and report it at the end of the year on your tax return are all considered income. For self-employed income, what is important is how long you had had the source of income, who does the accounts, what is the average level of profit over the last couple of years, is it continuing etc.
If you started last year, but you are earning a suitable amount of money – you probably won't have even filed one tax return, and so there is absolutely nothing at all to verify this. You will have your bank statements, and there may be an accountant's reference, but most lenders won't consider that suitable.
1 Year not yet reported – forget it – it is just not enough information. 2-3 Years – income reported on your Tax Return (your SA100) and consequently it will appear on your SA302 from HMRC (a summary of your taxable position) that can be worked on, always.
Remember – income is income is income is income. So, the income multiples will be the same as for employed income. However, if it is new income (meaning less than a couple of years), if it is unreported income, if there are loads of expenses making the net profit quite small – these are the things that will frighten any lender. Having your accounts in order is the first step in the process of getting a mortgage.
Please don't hesitate to call me directly on 020 7504 1090 or 01983 642 643 if you would like to talk, this or a similar scenario, through with me.
The information contained in this answer is for illustration purposes only and does not contain all the details required and should not be used as a personal recommendation without them. Do contact Bram if you would like an entirely free consultation to talk through your requirements, exact circumstances and best mortgage options.