For the vast majority of homebuyers, the main thing that will affect their ability to secure a mortgage is their income. Mortgage providers will look at the amount you earn when deciding how much they’re going to lend you. This can significantly affect your buying budget and therefore the size, location and type of property you’re able to purchase. Understanding exactly what lenders will be looking at and how they might view you and your salary could help you to secure your mortgage and, in turn, your dream home.
Self-employed vs employed
In general, the type of work you do won’t have an impact on your ability to get a mortgage. However, the way you’re employed will. If you’re employed and have a regular salary your mortgage application should be relatively straightforward. Lenders will generally want to see that you have a contract, that you’ve been at your role for a while, and will want to know exactly how much you take home at the end of the month. Once your salary has been confirmed, they should be able to make you a mortgage offer fairly quickly.
If you’re self-employed however, things are a little different. As TotallyMoney says “Post-credit crunch, it has become trickier for self-employed workers, freelancers and contractors to get a mortgage – but it’s not impossible.” You’ll need at least two years of books, three in some cases, and lenders are likely to look carefully at your job security and your ability to earn. As long as you have all the paperwork in order, securing a mortgage should be possible, you might just have to put in a little more legwork to get a good deal.
Overtime and bonuses
If a large part of your income comes from overtime and bonuses, it could have an impact on how much banks are willing to lend you. Not all mortgage providers will take overtime and bonuses into consideration when calculating your loan, meaning that you could end up being offered a much smaller amount than you expected. If this happens to you, speak to an expert mortgage advisor to find out if there are any providers who will take your overtime and bonuses as part of your salary.
Length of employment
If you’ve only just started working in your new role, mortgage providers may be reluctant to approve your loan. Often, they’ll want you to have completed any probationary periods and secured your position before the mortgage offer is made. Although this may be frustrating, waiting just a few months could open up your mortgage options considerably.
If you’re currently looking for a mortgage and need a little expert advice to find the best deal, we can help. Get in touch with a member of our team to find out more.
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Written by: Editorial Team