Nationwide Improves Lending to Self-Employed Individuals.

We are pleased to announce the following improvements to self-employed mortgage criteria from Nationwide. 

• The maximum Loan to Value for self-employed applications has been increased to 95% from 85%.
• The loan to income cap has been extended from 4.49 times to 5.5 times income.

Even though during the pandemic these criteria were reduced, Nationwide is now showing their support to the self-employed sector by making the criteria more generous.

Self -Employed Mortgage Criteria

Majority of lenders, who access affordability on a self-employed applicant’s mortgage, will look at the last 2 years tax calculations average. However, if the latest year shows a reduction in income, lenders will generally use this figure for the affordability and not average out.   There is a selective number of lenders who will look at the latest year and if there has been a substantial increase in the income, provided the lender can feel comfortable that the income is sustainable they will use this figure in their assessment.

In the present climate, many self-employed individuals derive their income from Limited companies via salary and dividend payments. A considerable amount of business owners do not withdraw all profits from their company, however, could do so if needed. Therefore, there are a selective number of lenders who will consider the applicants salary and their share of the business profits as income.

Proof of Self-Employed Income

Even though individuals have until the 31st of January to submit their tax calculations to HMRC, lenders including Nationwide, will not accept calculations that are over 18 months old. Therefore the 2021/22 tax calculations will now be out of date for any mortgage calculations from the 5th of October. Therefore, if you are looking to apply for a new mortgage from the 5th of October, you will need to submit your tax calculations ahead of time.

How can Brooklyns Financial help?

If you are self-employed and need help exploring the self-employed mortgage market, will advise you on the options available that are bested suited to you. We are here to help you every step of the way Just give us a call 01628 564631 or email us info@brooklynsfinancial.co.uk for an initial chat?

Your mortgage is secured on your property. Your home may be repossessed if you do not keep up repayments on your mortgage.

The information contained within was correct at the time of publication but is subject to change.

Source: Nationwide