Whatever your profession, finding the best available mortgage for you can be a challenge. With so many lenders and so many deals, how do you sort the wheat from the chaff? Whether you’re a first-time buyer, moving home, or looking to remortgage for a better deal, let’s take a look at some of the factors accountants need to take into consideration.
What advantages do accountants have when applying for a mortgage?
Many accountants are high earners, which obviously confers advantages when it comes to calculating affordability and, therefore, the maximum amount you will be able to borrow. Being in a strong financial position also has the potential to allow access to a better range of mortgage products, particularly if you are in a position to put down a larger deposit.
What challenges do accountants face?
While accountants are often high earners, many are also self-employed, and some lenders are ill-equipped to deal with mortgage applicants who have an irregular income that’s not easily provable by payslips. Accountants’ earnings can be unpredictable, especially in the early days of establishing a practice. The downside of this is that accountants can be excluded by such lenders from the best available deals.
Another issue is that accountants’ businesses are often positioned in such a way as to limit tax liabilities. The result is that to some lenders you might appear to be less well-off than you are, which means you might not be able to borrow the amount you want.
Mortgages for accountants
Accountants have the same mortgage options open to them as any other potential borrower. The most common type is a repayment mortgage, where monthly payments are calculated to ensure both the capital and the interest payable on it have been repaid by the end of the agreed mortgage term. Interest-only mortgages are also available, provided a suitable repayment vehicle is in place to repay the balance at the end of the term. Mortgage product options include fixed rate and tracker mortgages, which track the Bank of England base rate. A specialist mortgage broker will be able to offer advice as to which type of mortgage is best for you.
How do I prove my income?
If you are employed by an accountancy firm, or as an accountant within a different type of business, then all you will need are copies of your payslips. If you are self-employed, then things get a little more complicated. Some lenders will ask to see up to three years’ worth of accounts, and most will want to see at least two; these must be prepared by a chartered accountant. Lenders may also ask for copies of your SA302 year-end tax calculations from HMRC, either in addition to or instead of full accounts.
Be prepared for the fact that some lenders might not accept the highest annual figure as your true income for the purposes of affordability assessment – even if it is the most recent and income has been shown to grow over the period. They might instead work on an average earnings figure across however many years’ worth of accounts they have asked to see. If your practice has taken off in the past year and you were banking on the mortgage loan being based on the recent, higher figure, you might be in for a disappointment, as you won’t be able to borrow as much as you had hoped.
How much can I borrow? And how much will it cost?
All mortgage applications are subject to an affordability assessment, which can limit how much you can borrow if you are already heavily financially committed. The amount you can borrow is based on a number of factors, including income, other financial commitments and also your credit rating. If you have a patchy credit score and a relatively small deposit, a mortgage is likely to cost you more than if you have a good credit score and a larger deposit.
How Just Mortgage Brokers can help
Here at Just Mortgage Brokers we have a team of specialists with many years of experience helping accountants to find the best mortgage available for them. Get in touch to speak to an impartial, professional broker and find out how we can help you.