Case Study –Securing a First Home With Only One Year of Self-Employed Accounts

The Situation

A self-employed professional approached Henry Dannell while looking to purchase their first home.

The client had only one year of self-employed accounts available, meaning their mortgage options were more limited than they may have been with a longer trading history.

At the same time, securing the required level of borrowing was important to enable the client to proceed with their intended purchase.

The Challenge

Lender requirements for self-employed applicants can vary considerably, with many preferring a longer trading history before using self-employed income for affordability purposes. With only one year of accounts available, the number of lenders able to consider the application was therefore restricted. However, the client's most recent income figure was only one part of their wider circumstances. Their professional background and progression in earnings provided additional context for lenders prepared to consider applicants with a shorter trading history. The challenge was therefore to identify a lender whose criteria could accommodate the available one-year trading history while supporting the level of borrowing required.

The Solution

We reviewed the market with a particular focus on lenders able to consider self-employed applicants with one year of accounts. Rather than assessing the available income figure in isolation, we considered the client's professional background and earnings history as part of the wider application and identified a lender whose criteria were appropriate for their circumstances. This enabled us to secure the borrowing required for the client to proceed with their first home purchase. Of the mortgage options identified that could provide the required borrowing for the client's circumstances at the time, the selected product also offered the lowest rate available through our research. The result allowed the client to proceed with their first property purchase without waiting for an additional year of self-employed accounts. The case demonstrates why a shorter self-employed trading history does not necessarily mean property plans need to be placed on hold. Where the client's circumstances can be appropriately evidenced, understanding which lenders are prepared to consider a shorter trading history can materially affect both borrowing capacity and the mortgage options available. Please note: A mortgage is secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. Mortgage availability and affordability are subject to individual circumstances and lender criteria. Requirements for self-employed applicants vary between lenders and may change.