Getting approved for a mortgage can be a daunting task, especially if you are self-employed. Mortgage lenders often require more documentation from self-employed individuals than they do from traditional employees. This can include tax returns, bank statements, and other financial records. However, not all self-assessment documents are accepted by mortgage lenders. In this article, we will discuss the self-assessment documents that are commonly accepted by mortgage lenders.
What is a Self-Assessment Document?
A self-assessment document is a document that shows the income and expenses of a self-employed individual. This document is used to calculate the individual’s tax liability. Self-assessment documents can include tax returns, profit and loss statements, and bank statements. These documents are important for mortgage lenders because they help to determine the borrower’s ability to repay the loan.
Tax Returns
Tax returns are one of the most important self-assessment documents that mortgage lenders look at when considering a mortgage application. Tax returns show the borrower’s income and expenses for the past two to three years. This information helps lenders to determine the borrower’s ability to repay the loan. Self-employed individuals may need to provide both personal and business tax returns.
Profit and Loss Statements
Profit and loss statements are another self-assessment document that mortgage lenders may accept. These statements show the borrower’s income and expenses for a specific period of time. They are useful for self-employed individuals who do not have a consistent income. Profit and loss statements can be prepared by the borrower or by a professional accountant.
Bank Statements
Bank statements are also important self-assessment documents that mortgage lenders may accept. These statements show the borrower’s income and expenses over a specific period of time. They are useful for self-employed individuals who do not have a consistent income. Bank statements can also show the borrower’s ability to save money, which is important for lenders when evaluating a mortgage application.
Other Financial Records
Other financial records that mortgage lenders may accept include invoices, contracts, and receipts. These documents can help to support the borrower’s income and expenses. They can also show the borrower’s ability to manage their finances. However, these documents may not be accepted by all lenders, so it is important to check with the lender before submitting them.
Conclusion
Self-employed individuals often face more challenges when applying for a mortgage than traditional employees. Mortgage lenders may require more documentation from self-employed individuals, including tax returns, profit and loss statements, bank statements, and other financial records. It is important for self-employed individuals to gather all of the necessary self-assessment documents before applying for a mortgage. By doing so, they can increase their chances of getting approved for a mortgage and buying the home of their dreams.