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How to remortgage if you’re self-employed

We take a closer look at remortgaging when you’re self-employed and find out when you should do it, the costs, how long it takes, and how to do it.

Summary

  • Remortgages for self-employed professionals are available and are not as difficult to secure as many believe.

  • If your paperwork is in order, you can remortgage your home up to six months before your current deal ends.

  • Remortgaging costs will differ due to various fees and charges.

  • A mortgage broker can assist those who are self-employed in successfully remortgaging their home.

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Can I remortgage if I’m self-employed?

According to research by CMME and IPSE, 60% of self-employed people in Britain believe they are expected to jump through more hoops when applying for a mortgage compared to employees, while 52% think lenders’ mortgage advisers do not want self-employed people as customers. 

Understandably, some self-employed people who have a mortgage don’t feel confident when it comes to remortgaging.

Thankfully, remortgages for self-employed people aren’t a pipe dream. A mortgage broker can help boost your chances of a successful application by taking your circumstances into account.

They understand lenders’ preferences and consider your income and financial situation before you submit your application. 

As you’ll see, remortgaging your home when you work for yourself isn’t as difficult as it may sound.

When should you remortgage?

In theory, remortgaging when you’re self-employed is possible at any time. In reality, it differs from person to person, as it largely depends on their financial situation. 

You can remortgage your home up to six months before your current deal ends, and a broker can switch you to a lower rate quickly if one emerges.

While remortgaging early might seem like the right thing to do, it’s worth considering many factors before making a decision.

How much does it cost to remortgage on average?

One of the first things to consider is how much remortgaging costs.

Unfortunately, there’s no one set fee. Instead, various factors are worked into the total cost.

These factors include:

  1. An early repayment charge (ERC) of between 1% and 5% of your outstanding balance if you’re remortgaging during your current deal. 

  2. Admin charges or a deeds release fee.

  3. Legal fees for a solicitor to transfer your mortgage to another lender.

  4. A valuation fee of £1,500 or less for the new lender to value your property, but there’s no structural survey or homebuyer’s report to worry about.

  5. Booking/application/reservation fees of between £99 and £250.

  6. An arrangement fee that’s a percentage of the amount you’re borrowing or a fixed amount.

  7. Potentially, a broker fee of approximately £500.

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How long does it take to remortgage?

On average, applications for remortgages for self-employed people take between two to three months.

You can start looking for a remortgage deal six months before the end of your current one. 

It’s important to be aware that you might need to pay an ERC, which can be quite steep if you end your current deal early.

However, you can time your new mortgage to start once your current one ends. 

How can I remortgage if I’m self-employed?

If you have decided that remortgaging is right for you, and you have determined when you should do it, the next step is to start getting ready for the application process.

Below, we detail the important parts of the process for a self-employed individual.

Have all your financial documents ready

Providing evidence of your income and financial stability is one of the biggest challenges faced by self-employed people remortgaging their homes.

Most lenders require you to submit several years’ worth of bank statements and tax returns to assess your financial situation, although lenders who welcome newly self-employed people may require only one year’s worth of accounts.

Make sure you have all the required documents and that they are in order.

Keep tabs on your credit score

It’s difficult to secure favourable remortgage terms without a good credit score. Review your credit report and sort out any inaccuracies before applying. 

Improve your credit score by making timely repayments on loans and credit cards, and do your best to reduce any outstanding debt.

Lenders will be reassured of your financial stability and responsibility if you have a healthy credit history, which increases the chances of your application being approved.

Provide proof of your future earnings

Your self-employed remortgage application stands a better chance of approval if you can provide proof of your future earnings.

Most lenders are happy to consider evidence of your future earnings potential, so highlight any upcoming contracts or projects that will provide you with a stable income. 

If possible, also provide the lender with a good business plan and growth strategy. An accountant can help you with earnings and tax calculations if you need support.

Confirm your financial stability

Some lenders are happy to make concessions around the issue of stable income if they know that you are self-employed

Even so, you will still need to demonstrate that you can make your repayments.

One way of doing this is to demonstrate stability in your work and to highlight periods of consistent earnings.

It’s useful to provide evidence of predictable cash flow and reliable sources of income, such as steady work, retained clients, and long-term work contracts.

Seek expert financial advice

Despite perceptions of the difficulties the self-employed face when applying for a mortgage or remortgaging their home, the process is not as bad as expected. 

With the right preparation and support, the process can run smoothly. 

Let Unbiased match you with a mortgage broker to learn more about remortgaging, find the best deals, and gain expert advice.

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We’ll find a professional perfectly matched to your needs. Getting started is easy, fast and free.

About the author
Our team of writers, who have decades of experience writing about personal finance, including investing, retirement and pensions, are here to help you find out what you must know about life’s biggest financial decisions.