Self Employed

Want to be your own boss?

Ever have that Monday morning feeling? Or even worse, that Sunday night feeling? Ever wondered what being your own boss might be like? We have had a lot of questions recently about how being self employed will affect your chances of getting a mortgage, so here is a quick guide that will help those who are self employed or those that are thinking about making that jump- after all there are 122,000 self employed people in Northern Ireland alone.

Mortgages for the Self Employed

Often we hear people worrying about not being able to get a mortgage, or remortgage when self employed. This is not true. There are many lenders that will happily give you a mortgage although most will want to see two years of accounts.

If you have just set up a business or don’t have two years worth of accounts, there is an alternative. Halifax will lend based on one year of accounts. This is a real game changer for those that don’t have the luxury of waiting two years.

Amongst the lenders that will offer a mortgage to those self employed, not all things are equal. Most lenders will take the average of the 2 years income and lend based upon that. 

So for example, if in your first year you made a net profit of £12,000 and your second year you made a net profit of £32,000, most lenders (in the example below we used Barclays) will take the average of your two years and offer you a mortgage of up to £99,000.

Santander however will lend based on the 2nd of your two years. So if you had a tight first year or had a lot of overheads initially, if we were to take the same example as above (Year1 – £12,000, Year 2- £32,000) Santander would lend £144,000! 

 

Going directly to a bank, building society or lender ensures you get the best deals that they have available to them. Coming to Crawford Mulholland ensure that you get the best deals available across the market along with the added benefit of year of experience and market knowledge.

Providing For Your Loved Ones

The other question we get often from self employed people is about making sure their house and family are provided for if they were unable to work due to illness or injury. For those who are self employed, we usually recommend income protection. 

What is it?

Income protection is a type of insurance that pays out a tax-free monthly sum if you’re unable to work due to accident or illness. The aim is to help protect your standard of living and replace part of your income until you are able to return to work or until the end of your policy term.

The 3 most common claims are for: 

  • muscular skeletal injury 35% 
  • mental illness (stress anxiety depression) 21%
  • cancer 14% 

 

How much protection does it offer?

Income protection is paid out monthly until you are able to return to work and typically you can insure approximately 60% of your gross salary free of tax. The cost of your payments is based upon a variety of factors including age, health, occupation if you’re a smoker. 

For many, this is a great way to not only provide peace of mind but also much needed financial security if something were to happen. 

 

Should I take out an income protection policy?

This is very much dependent on your circumstances and financial situation. 24% of families would seriously struggle with no savings put aside for a ‘rainy day’ while 45% of families would last less than 1 month. If you have limited to no savings or your spending is high, then we would recommend you get in touch for a no obligation discussion around your options.