Self Employed & Annual Bonuses
Why can now be a good time to apply for a mortgage?
April is the time of year where Tax Returns have been submitted and employees will receive their P60s. With all that in mind, now could be a good time to apply for a mortgage whether you’re a first time buyer or looking to move house.
As April brings in a new Tax Year, employees will be receiving their P60 and individuals who are self-employed will have their latest Tax Returns. With all that in mind, whether you’re a first time buyer, looking to move to a new house or looking to start your landlord portfolio – now could be a good time to apply for a mortgage.
Latest Tax Returns
With your latest tax returns available, those who are self-employed will now have proof of their income from the last 12 months. With this information, lenders can calculate a more accurate affordability assessment of your circumstances.
Furthermore, if the business has generated more profits than the previous year, your latest copies can be used as evidence to demonstrate higher affordability.
Do you receive an annual or quarterly bonus?
As a mortgage lender will usually ask for your latest three months of payslips (they can request more or less than three months depending on the lender) these may not include an annual, bi-annual or quarterly bonus.
For example, if you’re looking to apply for a mortgage in April and you received a large annual bonus in December, your last three payslips will not display this bonus.
As a P60 demonstrates how much you have earned in the last 12 months, any bonuses throughout the last tax year can potentially be used for your affordability check. Consequently, it can be an opportunity to increase the affordability that you can present to a potential mortgage lender
What if my mortgage is due to expire this year?
If your current fixed mortgage product is due to expire this year, you could potentially secure a new mortgage product 6 months before your existing one is due to end. With a new rate secured, you can avoid any further increases that may occur.
As we actively keep checking our lender’s rate, if the rates were to decrease further we will endeavour to secure you the lower rate where this is possible.
If you are currently on a standard variable rate (SVR) or a tracker mortgage, your monthly payment will be affected by any future announcements from the Bank of England (increases or decreases). You could potentially save money by switching to a fixed rate to avoid any future increases, however you will need to check for any potential early repayment charges (ERCs) which may be owed were you to exit your current mortgage product early.
Unsure of what’s the best thing to do? Speak with a mortgage broker
Navigating the mortgage market can be difficult with numerous lenders available, all with their own unique set of criteria. This is where a mortgage broker like us can help, we can search the whole of the market for you to find the mortgage product which best meets your requirements.
Call us on 01270 443510 or complete our contact form and a member of our team will be in touch whenever it’s best for you to discuss your residential or buy to let mortgage needs.
This blog is for general information only and does not constitute advice.