Self-Employed mortgage brokers in Cambridge

Self-Employed mortgages in Cambridge: what to know

Self-employed applicants are not treated worse than employees, but they are assessed differently. Lenders want to see a track record — usually two years of accounts or tax calculations, occasionally one — and they differ substantially in what income they will actually count. Sole traders, company directors and contractors are each assessed on a different basis. For self-employed borrowers in Cambridge, choosing the right lender is often the difference between a comfortable approval and a decline.

• Sole traders are generally assessed on net profit; company directors on salary plus dividends, though some lenders will use salary plus retained profit, which can be far more generous.
• Day-rate contractors are often assessed on an annualised day rate rather than accounts, which frequently produces a much higher borrowing figure.
• Most lenders average the last two years, but some use the most recent year alone. If your income is rising, that difference is significant.
• Aggressive expense claims reduce declared profit and therefore borrowing power. It is worth understanding that trade-off with your accountant well before you apply.

What matters locally in Cambridge

The central and inner areas — Newnham, Petersfield, Romsey — are Victorian terraces with intense demand and limited supply. Trumpington, Eddington and the northern and southern fringes hold most of the new-build, including large planned developments and a significant amount of shared ownership. Villages within cycling or rail distance take a large share of the family market. College and institutional ownership of land, and occasional restrictive covenants or leasehold arrangements attached to development sites, are more common here than elsewhere and can affect which lenders will proceed.

• Applicants on work visas, where lender requirements vary widely on visa type, time remaining and minimum period of UK residence.
• Equity and share options from early-stage companies, which most lenders will not count as income at all.

Questions worth asking a self-employed broker

How many years of accounts do I need in Cambridge?

Two years is the common requirement. A smaller number of lenders will consider one year, usually with a larger deposit or where you were previously employed in the same line of work.

What income will a lender actually use?

It depends on your structure. Sole traders are typically assessed on net profit, company directors on salary plus dividends, and some lenders on salary plus retained company profit. Contractors are frequently assessed on an annualised day rate.

Do I need my accounts signed off by an accountant?

Most lenders accept SA302 tax calculations with the corresponding tax year overviews from HMRC. Some also want accounts prepared by a qualified accountant, particularly for limited companies.

Can I get a mortgage in my first year of trading?

It is difficult but not impossible, especially if you moved from employment into self-employment doing similar work. Expect a narrower lender pool and a larger deposit requirement.