Can I get a Mortgage with 2 years Accounts?

In the second of these posts for self employed mortgage applicants, we take a look at getting a mortgage with 2 years accounts.

Most mortgage lenders will average out your last 2 years accounts to determine what they will use for your annual income. So if your latest years income was £30,000 and the previous year was £20,000 that averages out at an income of £25,000.

In this situation, you would be looking at normal rates with normal lenders, albeit there will usually be a little more work involved than if you were employed – but being self employed you are no doubt used to doing a little more work than employed people – 9-5, whats that I hear you saying! We know what it is like.

All fairly straight forward assuming £25,000 income is enough and the income is staying level or increasing.

Where it starts to become more complicated is if your income has increased significantly year on year and you want to use the higher figures. In that instance, it is probably worthwhile having a read of the “Can I get a Mortgage with 1 years Accounts” post to get an understanding of your options.

2 years accounts with decreasing income

This can be a problem if the decrease is significant. Most lenders will use the lower figure, but on the upside you should still be eligible for normal rates. The issue however is why there has been a drop. If it is significant, we need to understand:

  • Why there was a drop,
  • Will this lower income be the new normal,
  • Is it just a dip and if so what caused it.

The answer to the above questions will determine what is available and the best route to take. A prime example would be you went and bought a work van for cash which cost £10,000. That would explain a £10,000 drop in income and it would also very likely be a one off transaction and so we may be able to find a lender who is prepared to add that £10,000 back in to the profit of the business when looking at how much they will lend.

But like anything, the devil is in the detail. If the profit has dropped because your rent has increased or you have lost customers then it is very likely we will need to work off the lower income as that is very likely to be the new normal unless you pick up new customers.

How can Mortgage Success help?

This is the type of case where we can come in to our own. The important thing is to explain the story to us, we will need evidence to back it up (receipts/accounts/accountants letter if a large transaction for example). We can then put everything together and speak to the lenders we know who are more open to making an exception and looking at things with an open mind.

Whilst a lot of Mortgage lenders criteria is published online, there are times where bits of criteria can be waived if the rest of the case is a good one and can be evidenced. So let us put our experience to good use and see what we can get you.