L&C Mortgages has issued the alert ahead of 6 October – a crucial date for anyone who fills out a tax return and is taking out a mortgage.
But why is the date significant? The mortgage broker explained lenders typically want to see two years of income track record to evidence self-employed borrowers’ income.
Even though tax returns for the tax year ending April 2025 don’t need to be submitted to HMRC until the end of January 2026, mortgage lenders will expect the most recent year end to be no more than 18 months before the application.
That means that many lenders will no longer be able to accept the latest evidence of income from the 2023/24 tax year for applications received after the 5 October.
David Hollingworth, associate director at L&C Mortgages said: “It could come as a nasty surprise for any self-employed borrowers that aren’t aware of this requirement. As the 18-month timeline ticks over, those applying for a new mortgage could find that they need to submit their tax return in a hurry to meet lenders’ requirements.
“That could cause a delay that would be particularly unwelcome for those looking to move home but could also affect those remortgaging to a better deal. It’s worth looking ahead if your deal is ending soon and filing your return so it’s up to date could make for a smoother mortgage journey.”
L&C can has answered some common questions to help self-employed workers who are about to take the leap and buy a home.
Can I get a standard mortgage deal?
Hollingworth said: “Some may think that they can’t get a mainstream mortgage but that’s not the case.
“As long as the income evidence is there, high street lenders will offer the same deals as those on offer to employed customers.”
What if I don’t have two years of accounts or self-assessment?
Most lenders will typically want to see two years’ track record to back up the level of income, explained Hollingworth. “That can make it more difficult for those that have gone self-employed more recently but some lenders may be able to consider one year in the right circumstances, so take advice.”
Why do lenders want two years of accounts?
Hollingworth explained, self-employed income can fluctuate from one year to the next, unlike that of employed customers on a basic salary.
“Lenders are therefore looking to see that there’s a better chance of consistent income on which they can base their affordability assessment” he added. “If there’s any big fluctuation lenders will want to understand why to help them make the mortgage decision.”
Contact one of our highly experienced mortgage advisors today on 0121 500 6316 to discuss your mortgage needs.
