What are the main difficulties for mortgages for self employed dentists?

There are many reasons why self-employed dentists have got in contact with me in the past. Below are a few real life examples which might relate to your experiences so far and how I was able to solve these.

Self Employed for 1 year or less

The most common problem I come across is when dentists have recently become self-employed. Most lenders will ask for at least two years proof of self-employed history with some even asking for three.

As you are now self-employed its likely your earnings have increased and you want to use this towards buying a house, but if you don’t have a history of self employment, the majority of lenders will reject you.

There are mortgage lenders that will consider your income via remittance slips you receive from the practice you work at. The more of these you can provide the better as it will give the mortgage lender more of an understanding of your earning potential.

Two separate examples of this included one client who had 12 months history and another who had 9 months history. For both clients I was able to secure mortgage options. For the 12 month client I was able to use the gross income across the 12 slips. For the 9 month client I was able to acquire an accountant projection which allowed the client to secure a mortgage.

Low net profits on limited company

This has happened for a few clients where the net profits on their ltd company does not reflect current earnings.

It is hard being self employed as your proof of income for mortgage lenders is always, at the very least, 12 months out of date. In those last 12 months you may have started doing work that is earning you more money, but how can you prove this?

This leads to many self employed dentists either putting off buying a property or not maximizing their borrowing ability.

I have had some clients that have had this particular issue and again I have been able to secure a mortgage for them.

Again using remittance slips or an accountants projection can be used by some mortgage lenders to proof your more recent income and therefore borrow more money. This in turn helps you to buy a property more reflective of your current income.

Recent change from sole trader to limited company director

As if it wasn’t already tough enough being self-employed, the majority of lenders treat moving from sole trader to limited company as a similar situation to moving to self employed for the first time.

You will have some lenders that will use salary and net profits to prove income, whereas some will still use your salary and dividends. If you approach a lender that uses net profits you may be in a situation where you can’t evidence this yet as you haven’t done your first-year end yet.

This example is a little bit easier to solve. There are some lenders that will work off one year’s accounts and some will take into account your history of being a sole trader.

If you have less than a years accounts, it may be I would look at the remittance slip options or an accountants projection, but it would completely depend on your circumstances.