How to get a mortgage as a freelancer in the UK?

How to get a mortgage as a freelancer in the UK?

It doesn’t matter whether you are in the UK or any corner of the world; getting a mortgage as a freelancer is always a bit complicated. However, it is not a hopeless case because, with due attention to several do’s and don’ts, there are chances to borrow funds for your significant purchase.

How To Get A Mortgage As A Freelancer In The Uk?
How To Get A Mortgage As A Freelancer In The Uk?

Why are things difficult for the freelancers?

Before you go further, it is better to understand why it is difficult to get a mortgage for a freelancer.

  • The mortgage providers always seek stability in repayment capacity, and that is possible through only regular income. The freelancers are devoid of the tag of ‘standard salary’ due to the volatile nature of their income.
  • An employed (salaried) person has only one and reliable source of income. On the other hand, the self-employed people work with different clients, which create the issue of stability and reliability of income source.

The ‘how-to’ tips for a smooth mortgage approval

Here is a collection of efforts that you need to invest to get a ‘yes’ on the application from your lender.

Try to get regular projects

Whatever you are, a contractor or a partner in a business, it is essential that you keep getting the new projects regularly. Already it is complicated for the lender to assess the income of a freelancer due to the uncertain earning source. If your bank statements show continuous incoming of money, it is easier to convince the lender on repayment capacity. The best strategy is to get repeated projects, as it can help you establish the truth that people know you in the industry. They come back to you, which is a hint that the performance is excellent and also the future earning as well as repay capacity.

Gather the biggest possible amount for deposit

Of course, the minimum amount for deposit is 5% of the total property value. However, you also know that in your situation, the rule of least percentage will never work. Bigger the size of the down payment, more potent are the chances of attainment of funds. Go for 10% or 15% or 20% or (this may sound a bit impracticable) if possible go for 22% or 25%.

The bigger deposit helps in two ways; first, the lender gets the opportunity to see your financial capacity. This is because saving a considerable amount of money denotes that the applicant has good financial habits. Second, you can reduce the loan amount and in turn, the burden of the mortgage obligation. The monthly instalments will be smaller, and there are chances that you may get a lower rate of interest.

Don’t act as the ‘One Man Army’ take professional assistance

It is good to be self-dependent and try to do things on your own, but not everything is in your control. Knowledge of a particular field or industry cannot be attained in a day. Maybe you are not familiar with the rules and regulations of the mortgage industry.

  • There are procedures and formalities that are confusing for most of the applicants. It is difficult to find a lender get the farms easily funds smoothly. Especially for a person with the employment status of a freelancer, things are not so easy.
  • Ignorance about the do’s and don’ts apply to many lenders at the same time. This step, in turn, can cause a vast degrade in credit score and that brings big chaos.
  • You may fail to submit the right type of documents which can become the cause of unnecessary delay. Above all, there are so many options in the market, and it is not easy to know which one is best. Oh yes, what about the finance companies that charge high-interest rates and sundry charges. Do you know about the purpose of such charges?

Don’t you feel you really need someone who can take care of all this mess for you and can bargain on the interest rates? All the above concerns make it so important to seek advice from a broker with specialist knowledge in the sector. With a proper professional backup only it is convenient to get safely on the property ladder.

Hope you are clear now…

The last important suggestion is that you should always try to look for a manual underwriter. In computer-generated underwriting, it is challenging to explain your financial situations. In the case of manual underwriting, a person handles the scrutiny of your mortgage application. It is easier to explain the source of your income and also how promising they are.