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How much self employed can borrow for mortgage

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  • How much self employed can borrow for mortgage

    How much self employed can borrow for mortgage

    It's true that the self employed need to meet stricter income criteria than those employed - but - the self employed are able to borrow just as much once they meet the lender's criteria.

    So, how much can you borrow if self employed? In a nut shell ou can borrow up to 5 times your net income.

    5x net income (or joint income) if there are 2 of you applying for a mortgage is a useful rule of thumb - however lenders do use an affordability calculator in order to determine how much you can borrow which can be accessed via a mortgage broker so it's wise to consult a broker first just to calculate the available mortgage amount.

    Here are a list of factors which would affect how much you could borrw:

    - if employed some banks will take 5x your gross basic salary plus overtime, car allowances,bonus and commission (depending if its regular or guranteed could mean the difference between taking 100% or 50%)

    - if self employed some lenders will consider your net profit if a sole trader or partnership or gross salary and dividend if a ltd co director

    - the number of childer in your family may lower the mortgage amount available since being dependants they may be treated as an outgoing cost.

    - any loan or credit card payments (if not paid off by the time the mortgage completes) will reduce how much you can borrow.

    - if your mortgage term is less than 25 years then since the mortgage payments will increase the shorter the term then again the amount you can borrow will decrease.

    There are several factors affecting how much you can borrow if self employed or employed - also, your credit score will have a bearing ie if you have adverse credit then rather than the lender declining your mortgage they may offer you a reduced amount.

    The only way you'll be anywhere near certain of he much you can borrow by securing a mortgage in principle from the lender which will provide the exact maximum amount they are prepared to provide.