Can I Get a Mortgage if I Am Freelance?

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Paige talks through mortgages for freelancers.

Can you get a mortgage as a freelancer?

The short answer is yes. It’s a little bit more complicated than other types of employment but it is something that is definitely accepted in the mortgage world.

Is it difficult to get a mortgage as a freelancer?

It’s more difficult than for a standard employed or self-employed individual but it’s possible. There are different ways to assess your income when you’re a freelancer. We’ll explore that a little bit more in a moment.

What types of mortgages can I get if I’m a freelancer?

Thankfully you’re not restricted to any particular type of mortgage – you can get a residential mortgage or a Buy to Let mortgage like anyone else. Just because you’re in the freelance world doesn’t mean you can’t necessarily go down the investment route.

How do I know if I’m classed as a freelancer?

If you’re a freelancer you would have shorter term contracts with individual companies. Rather than being paid and taxed through that company, you’re taking on self-employed work on a short-term basis with quite a few gaps between contracts. It’s very common in the entertainment industry, particularly.

How long would someone have to be a freelancer before getting a mortgage?

This is the slightly harder part of being a freelancer. Most lenders will want to see a track record of about two years. They’ll generally treat you as a self-employed individual so you’re going to need two years’ SA302s or, if you are getting employed wages on a contract, they’re going to want to see that you’ve got other contracts lined up in the future. You will need experience in your specific industry for two years working on a short term contract basis.

How much can I borrow and how much deposit do you need for a mortgage as a freelancer?

You’re going to need probably a minimum of 5% deposit if you’re a First Time Buyer, but my general rule of thumb is if you can achieve a 10% deposit it always puts you in a better position for the bank.

The more deposit you have, the less of a risk you are – and a bank is more likely to lend you money. If you’re a day rate contractor working on a freelance basis, they will potentially work off of your current day rate. If you’ve been doing contracts quite inconsistently but you’ve got your tax returns, they’ll base it on the earnings you’ve disclosed for your tax.

How do lenders assess mortgages for freelancers? What documents do I need to have ready?

It depends on the bank. Each bank has a different set of rules when it comes to people working on a more ad hoc basis. Most will want to treat you as self-employed – that’s the general rule of thumb for the high street lender.

They want to see your tax returns, which requires a document called an SA302 and a tax calculation. You can download these from HMRC or get them from your accountant. Banks will request to see the last two years’ of these to show how much tax you owed and how much you made that year.

Sometimes they’ll also ask for a copy of your current or potentially previous contracts to show that the work has been consistent.

How many months of freelance income do I need?

It very much depends – if you’re in a permanent employed role it’s not going to be considered freelance work. But if you’re on a shorter term contract, it will. Lenders are going to be more interested in the end in the actual contract itself rather than monthly payslips – they want to know the end date and how long you’ve got left in that contract before you need to find new work.

They also want to understand how likely it is for you to get another job in that same industry. They don’t like to see too many gaps between different jobs – even though working on a freelance basis does mean there are generally going to be gaps here and there.

If you don’t have a tax return, they’re going to be very reliant on your contract. Most of them will need you to be a day rate contractor. If you do not have your SA302 from your tax returns, that’s not enough of a work history. Have these documents together because if a bank is lending you a significant amount of money, they want to know that you’re going to be able to repay it.

What if I’m a self-employed freelancer?

If you’re a self-employed freelancer, it generally means that you’re doing small contracts and you’re liable to pay the tax yourself. You’re not reliant on the employer paying the tax for you. You may not have regular payslips and it’s likely you’re the one sending the invoices out to get paid for your services.

Can I get a mortgage if I’m employed with a part-time freelance income?

Yes, it’ll be seen as additional income. Generally speaking, they’ll want to see tax returns to show that this is consistent and they will normally take an average of the last two years worth of income if you are doing it contractually. They may not take it if you don’t have sufficient evidence that you’ve been doing it for a long enough period of time.

The bank wants to be comfortable that you are going to keep working in this industry. You need to show consistency to get a mortgage with freelance income.

Are mortgages for freelancers more expensive?

Thankfully no – the rates don’t change in line with your income – but they do change depending on how much deposit you have. The only reason they’d be more expensive is that if we have to use a more specialist lender, who may look at your freelance income differently. They may have slightly higher rates than the average high street bank.

What do I need to do to apply for a mortgage as a freelancer?

Always speak to a mortgage advisor first – we can point you in the right direction depending on what type of freelance work you do, how you’re currently getting paid and what industry you’re in. Certain industries can be assessed a little bit differently.

I would generally recommend having your tax documents ready, your previous contracts ready and being prepared with that element of it. Everything else should be standard documents for you to get hold of – your passport, your general ID and your bank statements.

Can I get a Buy to Let mortgage as a freelancer?

Yes, you can. More often than not, banks don’t mind what your individual income is. Some lenders have minimum income requirements of £20,000 to £25,000 and some lenders don’t mind at all what your income is. Some want you to own your own home already, though.

The Buy to Let market works a little bit differently – they use the rental income to assess how much you can borrow, rather than your personal income. It’s based on the merits of the individual Buy to Let property rather than you as an individual.

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Can I get a mortgage as a freelancer if I have bad credit?

Yes, and no. You can get a mortgage with bad credit, but it depends on what that bad credit is and how recent it was. It’s definitely unique to each person and the lender we go with.

If you’ve had an issue with credit in the last six years, I would look at trying to make your application as simple as possible to a bank. We would look at positioning a lot of your freelance work on a self-employed basis. It’s better if a lender sees you as self-employed rather than freelance, as freelancers can have a reputation for jumping between jobs so quickly that it poses a risk.

But if you’re earning consistently from that, and you’ve got two years’ documents to show it, a lender will be more comfortable. We would then look at the adverse credit separately to that and see if we could get you through. There are definitely adverse lenders who will treat you as a self-employed individual if they can, and make it work with the bad credit – depending on how severe that is.

It’s always better to be honest, especially with negative credit. If you don’t tell your broker, we will find out as soon as an application gets submitted – and then you’re back to the drawing board.

Be upfront and provide a credit report. I generally recommend people get one from somewhere like Experian or Checkmyfile where you can do a free trial. If you pay I think it’s about £14 a month. It’s definitely worth it if that is something that already concerns you.

Can I get a joint mortgage as a freelancer?

Yes, your job doesn’t impact anybody else’s. If there is a couple where one is a freelancer and one is not, that’s fine. Lenders will assess you the same way anyway. If your partner is employed, they will assess them via the normal route for that.

If you’ve got two freelancers together, both will be assessed in the same way – most likely with your contracts or with the SA302.

How can I boost my chances of getting a mortgage as a freelancer?

The main thing lenders want to see is consistency. If you are a freelancer, try to get solid accounts together from your accountant to show what you’re earning. If you are planning on taking out a mortgage, show as much as you can from your freelance employment to prove you can afford the mortgage that you want.

What about people thinking about going freelance? Should they wait?

I would generally wait for your mortgage to go through. You do normally need to notify your bank if you have a significant change of employment. But if you’re starting an application or one type of employment, I would wait until you’ve completed the mortgage before considering anything else.

Otherwise we would have to change what’s on your mortgage application to reflect your new income. That will sometimes change the decision that the lender will make.

How do I apply for a mortgage as a freelancer?

Call us and we will figure out what the options are – who to go with, and what’s affordable. There’s so many questions when it comes to starting to get a mortgage, especially when you’re freelance.

We’ll be able to break it all down to you as an individual. It’s very hard to be generic when you’re dealing with income that works so sporadically and so individually. It’s not something you can figure out by yourself – the banks’ websites are not tailored to give you personal advice on face value.

What advice do you have for anyone who’s considering applying for a mortgage as a freelancer?

Consistency is key. I’ve said it probably three times in this interview. Aim for consistency and make sure that your credit is managed effectively.

If you can, save up a little bit more for a deposit – that will always help. But I totally understand that it isn’t an option for everybody and just getting to a point where you can save a deposit takes a lot of time.


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