Self-Employed mortgage brokers in Manchester

Self-Employed mortgages in Manchester: 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 Manchester, 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 Manchester

The city-centre and Ancoats apartment stock is overwhelmingly new-build and leasehold, much of it bought to let. Salford Quays and MediaCity pull a similar crowd. Southwards, Chorlton, Withington, Didsbury and Levenshulme are dense Victorian and Edwardian terraces and semis with strong owner-occupier demand; north and east, Moston, Gorton and parts of Salford remain among the more affordable parts of the conurbation. The student belt along the Oxford Road corridor and in Fallowfield supports a long-established HMO market. Manchester has a large stock of pre-1919 terraces, so structural and damp findings on a valuation are a common reason for a retention or a reduced offer.

• Buy-to-let and HMO lending around the universities and in the inner suburbs, which needs lenders comfortable with multi-let property and, for larger HMOs, with local licensing.
• First-time buyers in the outer suburbs, where prices are within reach of average local incomes and the main task is simply finding the sharpest rate at 90 or 95% loan-to-value.

Questions worth asking a self-employed broker

How many years of accounts do I need in Manchester?

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.