Can I get a mortgage - I've only been trading for a year?
With us now coming to nearly the anniversary of the first lock down, so much has changed in the land of work. With so many employers now being forced to embrace the harsh reality that they will have some of their staff work from home, not alot of thought has been given to whether or not this is something that their employees want. For many the idea of the "spy in the cab" boss no longer looking over their shoulder at their every move or lack of it was greeted with delight. But for many it is the social interaction that work gives that is biggest loss. This loss of interaction has led many to look at some fundemental aspects of their work life. Indeed there is a now more than ever a willingness for those to take the leap of faith and go solo.
There are so many things to think about when you decide to make the jump and one of them is what do I do about the mortgage.
You will have two questions that need answered
Can I get a new mortgage if I am self employed?
The answer as always when it comes to mortgages is "Can you in the eyes of the lender afford the mortgage?" You will need to satisfy the lender that this new venture is going to be a success. Now, I know that your other half is your biggest supporter and your mum has obviously no worries that you've ditched your well paid job for some pipe dream of being a barista but the lender is going to be a little more difficult to persuade. They will look for hard facts not your wishy washy dreams of you becoming the next Starbucks. And hard facts come by way of accounts. The bottom line is that most lenders will want at least you to have had two years of trading before they will entertain a new mortgage for you. There are some lenders who will look at one year but they are few and far between.
How will my existing lender view me going self employed?
If you already have a mortgage then it is likely that you are going to have to stay with them for the forseeable future dependent on when you started trading and when your fixed rate mortgage - if you have one - is coming to an end.
If you come to the end of your fixed rate deal before the end of your first year's trading then we'll need to go back to your exisiting lender and have a chat to them about how they will view your circumstances. Difficult to say what their reaction will be as every lender has their own set of criteria. But what are they going to do? On the basis that your fixed rate deal is better then their Standard Variable Rate (SVR), you would have thought that if they were concerned about you not being able to pay your mortgage that they would agree to another fixed rate deal rather than force you on to the more expensive deal of SVR because you did not pass their criteria. You would have thought so wouldn't you!
If you are on a longer fixed rate and have one year's trading figures then we would again speak to your existing lender for you to see what they were going to offer you and we would also look to see what the market was going to offer you. It's then a case of you deciding whether to stay with your current lender or jump ship. And that is going to come down to weighing up savings against hassle. The usuaul remortgaging conundrum!
If your longer fixed rate is not going to expire until you have 2 years under your belt then you are in the best position. It is fair to say that after two years you will have access to the whole market and that means the best rates. It stands to reason that those that are offering mortgages on one year accounts are taking more of a risk and the interest rates reflect this. More choice as far as lenders are concerned should mean more competitive rates. It is also important to check in with your current lender before you jump ship. We would always do that so we knew exactly what all the options were.
So there we have it. There are solutions out there for you so that shouldn't be a reason for you not to take that leap of faith. The fact that you don't like coffee may be a more important reason?