How Just Mortgage Brokers Can Help You
Self employed taxi drivers, in common with many other self-employed people, can often find it challenging to get a mortgage. Regardless of how much you earn, many lenders still prefer the security of lending to people in contracted employment, who can easily prove their income with payslips. When it comes to taxi drivers, whose income may be variable and subject to work-related expenses, many mainstream lenders simply do not have the experience or procedures to assess income and evaluate the affordability of a mortgage.
Fortunately, there are more understanding lenders out there – usually beyond the usual high-street big names – whose underwriting procedures have the flexibility to accommodate self-employed mortgage applicants.
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Why you have to prove your income
Going back a little over a decade, lenders used to offer what were known as “self-certification” (or “self-cert”) mortgages. With a self-cert mortgage, the applicant made a declaration of their income, and this did not have to be backed up by documentary evidence. When the financial crisis came and lenders started tightening up their lending criteria, self-cert mortgages were one of the first things to go. In the years since, the Financial Conduct Authority – which regulates mortgage lending in the UK – set rules that mean mortgage lenders must obtain evidence of income, and apply appropriate affordability checks before lending.
How to prove your income as a taxi driver
As a self-employed taxi driver, you do not have the luxury of just providing pay slips to the lender to prove your income. Instead, they will normally ask to see your business accounts. Many lenders need to see three years’ worth of accounts to evaluate your income sustainability; however, there are some lenders out there who are willing to base their lending decisions on two year’s or as little as one year’s accounts. Normally, lenders require accounts to have been prepared or certified by a chartered accountant.
Some lenders may ask for your SA302 year-end tax calculation, either as well as or instead of full business accounts. If you are registered self-employed with HMRC, the SA302 shows your total declared income from all sources, and the amount of income tax and National Insurance contributions due. If you complete your tax return online, you can print your SA302s off directly from the online Self Assessment portal. If you or your accountant use commercial accounting software to submit your return, you can print it directly from the software. Alternatively, you can request the documents by calling HMRC on 0300 200 3310, quoting your National Insurance number and Self Assessment Unique Taxpayer Reference (UTR).
How Just Mortgage Brokers can help
Not all mortgage lenders are created equal when it comes to understanding the implications of self-employed taxi drivers’ income, expenses and net profit figures. Fortunately, we have access to lenders from across the mortgage market, including many who specialise in lending to the self-employed. Contact us today to discuss your requirements, and let us help set you on the road to your new mortgage.