Obtaining a mortgage with One Year's Accounts

Securing a mortgage is a significant step towards owning your dream home, and for those with self-employed or entrepreneurial ventures; and business owners, the process can sometimes seem daunting. Traditionally, mortgage lenders require at least two to three years of accounts to assess an applicant’s financial stability. However, there’s good news for those with only one year’s worth of accounts – it is indeed possible to get a mortgage. In this blog, we’ll explore the key aspects of getting a mortgage with one year’s accounts, provide insights into how to navigate this process successfully, and how we at RNR Mortgages can help.

1. The Changing Landscape of Mortgage Applications

In recent years, the lending landscape has evolved to accommodate a wider range of borrowers, including those with non-traditional employment and shorter self-employment histories. While many lenders still prefer applicants with two to three years’ worth of accounts, an increasing number now consider applicants with just one year’s accounts. This is particularly relevant for freelancers, consultants, and entrepreneurs who have recently ventured into self-employment.

2. Selecting the Right Mortgage Lender

When you have only one year’s accounts, it’s essential to choose the right lender. Different lenders have varying criteria for assessing mortgage applications, including the length of self-employment history they require. Researching and approaching lenders who specialise in working with self-employed individuals can significantly improve your chances of approval.

3. Demonstrating Financial Stability

One of the key concerns for lenders is your ability to repay the mortgage. With just one year’s accounts, you’ll need to showcase your financial stability convincingly. This can be achieved by:

Robust Accounts: Ensure your full company accounts are well-prepared, accurate, and professionally audited. The same applies to the Tax Calculations and Tax Year Overviews. This helps build trust with the lender.
Strong Credit Score: Each lender as their own credit scoring and this demonstrates your responsible financial behaviour. Pay attention to clearing any outstanding debts and maintaining a positive credit history.
Income Consistency: Highlight any consistent income patterns in your one year of accounts. A steady flow of income reassures lenders of your ability to make regular mortgage payments.

4. Providing Additional Documentation

To support your mortgage application, you might need to provide supplementary documentation. This could include:

References: Professional references, such as from Accountants can outline future projected income and provide more confidence to the lender.
Personal and Business Bank Statements: Recent bank statements can provide insight into your financial transactions and cash flow.
Business Plan: Outline your business model, future projections, and strategies for maintaining income stability. This showcases your commitment and vision for your venture.

5. Larger Deposit and Lower Loan-to-Value (LTV) Ratio

With a shorter self-employment history, lenders might be more favourable terms if you can provide a larger deposit. A larger deposit reduces the lender’s risk and can lead to a lower Loan-to-Value (LTV) ratio, potentially increasing your chances of approval.

6. Seeking Professional Advice

Navigating the mortgage application process with one year’s accounts can be complex. Seeking advice from mortgage brokers experienced in working with self-employed individuals and business owners can provide invaluable guidance and increase your chances of securing a mortgage that suits your needs. We at RNR Mortgage specialise in mortgages for self-employed individuals and business owners.

Conclusion

Securing a mortgage with one year’s accounts is not only possible but made simpler with the expertise of RNR Mortgages. As the lending landscape continues to evolve, more options become available for self-employed individuals and business owners.

Our tailored solutions, in-depth understanding of one year’s accounts mortgages, and commitment to your success set us apart. By partnering with RNR Mortgages for your mortgage needs, you’re gaining a strategic ally who will help you navigate the complexities of the mortgage application process, ultimately bringing you closer to realising your home ownership dreams, plus making your mortgage journey stress-free, hassle-free, and anxiety-free.