At Just Mortgage Brokers, we understand that professionals who are self-employed or who run their own business can sometimes find it difficult to find the mortgage that’s right for them.
Solicitors, accountants, doctors and a whole slew of other professionals may be highly successful and have a healthy income, but the structure of their employment or income profile may not fit into a neat box for lenders when it comes to mortgage affordability assessments – unlike those in more conventional salaried employment who can easily provide payslips and proof of employment.
Fortunately, we have access to lenders from across the UK mortgage market, including many smaller lenders who specialise in providing mortgages to professionals.
Mortgage options for professionals
Many mortgage lenders – but not all – provide mortgages for professionals such as dentists, teachers and degree-qualified engineers. Some lenders may offer mortgage products that are explicitly branded as professional mortgages, while others may apply slightly different criteria for certain professions during the mortgage application and underwriting process, to determine how much you will be able to borrow.
The reason lenders may offer special consideration is that, despite having to use different criteria to assess affordability, professionals are statistically lower-risk borrowers than other types of applicant. Degree-qualified professionals often have a more predictable career path, more stable income and the potential to be high earners. Features that may be offered on mortgages for professionals include:
- More favourable affordability assessment when working out how much you can borrow – applications are also often assessed individually, rather than using a formula.
- More flexibility in considering income sources when assessing affordability, potentially including such factors as bonuses, regular overtime and secondary income sources.
- Higher loan-to-value (LTV) borrowing allowed, for example 90% of the property value rather than 85% offered to other types of borrower.
- Flexible borrowing – for example the ability to make early part-repayments, draw down additional borrowing, offset savings to reduce mortgage interest, or take payment holidays.
- Other incentives such as free valuations, free legal fees or cashback.
How do I prove my income?
Lenders’ income verification procedures may vary depending on the exact structure and nature of your professional income sources. However, a common approach for professionals who are registered with HMRC as sole traders (or in a partnership) is to request full business accounts, prepared by a chartered accountant. The length of accounts required can vary between lenders – it’s common to request up to three years’ worth of accounts, but some lenders may only require two or one year’s accounts.
Some lenders may request copies of your HMRC Self Assessment SA302 year-end tax calculations – again, for a period of between one and three years. This can be either in addition to, or instead of full business accounts. SA302 documents can be printed off from the online HMRC Self Assessment portal or via accounting software. However, while a number of lenders accept copies of SA302s printed by the applicant or their accountant, others require original documents posted from HMRC, which can be requested by telephone.
Depending on the nature of your professional employment, the lender may request other documentation to verify your income, such as bank statements or copies of your work contracts to confirm your pay rate.
How much can I borrow?
The lender will consider your verifiable income as well as your expenditure on factors such as existing secured or unsecured credit commitments. Affordability assessments can be complex and vary from lender to lender, and it’s no longer as simple as assuming that you will be able to borrow, for example, five times your annual income.
However, lenders that offer this type of mortgage may apply more favourable weighting factors in affordability assessments for professionals, potentially allowing you to borrow more than someone in non-professional employment. It’s also true that smaller, more specialist lenders may be in a position to let you borrow more than a more mainstream bank or building society would.
How Just Mortgage Brokers can help
Professional mortgages are available from a number of lenders, but still represent a relatively niche segment of the mortgage market. At Just Mortgage Brokers, we have access to mortgage deals from lenders across the UK, from high-street banks and building societies to more specialist lenders including private banks. Call us today to discuss how we can help you find the professional mortgage that’s right for you.