Separate self employed products used to be, well, self-explanatory. But now you’ll find it’s more about the criteria, not the product, as lenders – such as us – have opened up main product ranges for your self employed or freelancer clients: meaning they have access to mainstream deals rather than paying a premium.
So, the products are there, but what about the way your self employed client’s income is assessed? Here’s a short guide to how we do it:
- For a limited company director, we’ll look at either salary + dividends, or share of net profit after tax + salary. If there has been less than a 20% increase or a decrease then we’ll take the latest year, or if more than 20% increase we’ll look at averaging this out.
- For sole traders and partners – for net profit, again we’ll take the latest year if less than a 20% increase or a decrease, or average out if more than a 20% increase.
If at least one of the applicants earns £100,000 or more we can use a 5.5x income multiple.
Later life + self employed = no problem.
As we take into account multiple sources of income this can be a real benefit for your clients looking to borrow in or into retirement.
When calculating affordability we can take non-manual self employed income up to the age of 75. For non-working directors, e.g. parents whose family firm is run day to day by their children or similar, then, provided the accountant can confirm this, we’ll take the dividend income they receive beyond age 75.
For retired applicants we’ll not only use 100% of state and company pension income in our assessment, but we’ll also utilise an uncrystallised SIPP/pension too – we’ll take 80% of the fund value, divide by the mortgage term and use the resulting figure in our calculations. Plus, for clients with investment income we’ll take 75% into account and, for those with buy to lets, we’ll take 100% of the average UK Land & Property income from the last 2 years.
Don’t forget we have no maximum age limit for capital and interest mortgages, with interest only capped at 95 at the end of the term. There is no maximum age on buy to let or holiday let.
There’s understanding in our underwriting.
Our expert underwriters consider every application individually, so where others see numbers, we see people and we know life doesn’t come neatly packaged. We’ll take a close look at your case rather than relying on a computer to make decisions for us.
Get in touch.
We’ve been supporting intermediaries with self employed cases for many years, with an expert support team and manual underwriters on hand to help. Contact us and make it simple with the Suffolk.