If your fixed-rate mortgage deal is coming to an end you’ve probably started to think about what to do next. Looking around for a good remortgage deal can feel like a real hassle, and if you’re self-employed it can seem far more complicated, but doing nothing means that your lender will move you on to their standard variable rate (SVR); making your mortgage repayments much more expensive.
So how can you take the strain out of looking for a remortgage deal if you’re self-employed, save money and still get the best mortgage deal?
We’ve teamed up Simply Lending Solutions, the self-employed remortgage experts to get their take on what the main problems are. Plus they explain how the right specialist mortgage broker takes the pain out of the process, and can save you time and money, even if they can’t get a better deal than what’s on offer from your current lender!
Before we examine how the right mortgage broker could be the answer to finding a money saving self-employed remortgage, let’s look at the issues.
When to remortgage?
Of course, you can change your mortgage deal at any time, for example in order to raise money for your business or in order to get access to a more flexible deal, although you should be aware of any penalties on your current mortgage. However, assuming you’re remortgaging because your current deal is coming to an end, you can start looking for a new mortgage deal up to 6 months before your current mortgage deal expires.
Your lender will contact you a few months before your deal ends and will in all probability make you an offer of a new deal. Although it can seem easier just to take the offer from your current lender, it’s always worth taking a good look around to see what else is out there.
What’s the problem if you’re self-employed?
In general mortgage lenders like borrowers who have a stable income that is easy to prove, which is why employees usually find getting a mortgage more straightforward than the self-employed do.
Employees have a contract of employment, which indicates a degree of stability, and are payed via PAYE, which means they can produce payslips as evidence of their income. These reassure lenders about your ability to meet your mortgage repayments.
The picture for the self-employed is different. Your future earnings are less secure, and you will need to provide your previous accounts, or tax returns, in order to prove your income. This can pose a problem as some accountants will seek to minimise your income for tax purposes – not ideal if trying to show a lender that your earnings are high.
Is it easier if you were already self-employed when you got your current mortgage?
If you were self-employed when you were accepted for your current mortgage you may find the remortgaging process slightly smoother than if you have become self-employed since then.
This is largely because, to put it simply, you will have access to accounts or tax returns covering a longer period. If you’ve only moved to self-employment in the last year or two, then you will obviously only have proof of self-employed income for this time. Most high street lenders will require tax returns for at least the last 2 years, but some will accept them covering a shorter period.
Can professional advice get you a better deal?
With all the complications attached to remortgaging when you are self-employed it can be tempting to just take the first deal your current lender offers you. As a self-employed person you are undoubtedly busy enough as it is without having to spend days trying to track down a great mortgage, without the extra hassle of getting all the required paperwork to a new lender.
However, with a vast mortgage market out there it usually pays to take a look around, and that’s where a specialist broker can help.
Using a professional mortgage broker means that they, not you, will be spending the time tracking down the most suitable deal for you. Speaking to a specialist broker who works regularly with the self-employed also ensures that they understand which lenders’ criteria most closely match your circumstances, ensuring that your application goes to a lender who is likely to accept it.
This is particularly useful if you have been self-employed for a relatively short time, as they will know the lenders that are happy to accept only 1 year of accounts, for example.
A broker will also check that there are no penalties attached to your current deal, which would make a move to a different, apparently cheaper mortgage financially inadvisable. They may also be able to secure lower fees than publicly available through their relationship with lenders.
If you do use a mortgage broker you should check that they are a whole-of-the market broker. As the name suggests, these brokers aren’t tied to a small panel of lenders, giving them access to a wide-range of products and giving you a better chance of an affordable deal.
Finally ask the broker about their position regarding your current lender. At Simply Lending Solutions they guarantee that if they can’t find a deal that is better than the offer you have from your current lender, then you won’t have to pay them a penny. They will however still handle the application process with your current lender, taking the hassle away from you, so it’s a win-win.