5 steps to a Taxi Driver Mortgage
21:58 30 January 2020
A taxi driver mortgage would be looked at as self-employed mortgage by any mortgage lender.
The Financial Conduct Authority (FCA) regulates the mortgage lending industry and it specifies that all lenders must see evidence of a self-employed person’s income as well as check that any monies borrowed can be afforded to be repaid by that person.
The following details the five steps needed in order to obtain that taxi driver mortgage.
- 1. You have decided you want to buy your own property, but you will need to have saved a deposit for a property which is usually 10% of the price to be paid. There are some lenders who might only ask for 5% deposit.
- 2. The way that your self-employed earnings can be evidenced is via your accounts. These are your income proof and must be prepared by an accountant who will not only prepare them but certify them too. Your accountant can also prepare a SA302 but If you do not use an accountant, your own SA302 yearend tax calculation can be used as your proof of income. The lender will usually multiply your annual earnings or rather, your annual net profit, by 4 or 5, in order to find the amount of mortgage loan that can be offered. The times multiplied will depend greatly on the lender you apply to as they do not all have the same criteria for this.
- 3. The lender, having seen proof of your income, will need to see evidence that you can afford the loan. For this, your bank statements will need to be seen. Evidence of your business costs should be on here. For example, taxi insurance costs, taxi repairs and local authority licencing costs and even fuel costs. It pays to speak to a mortgage broker well in advance of applying for your mortgage as he/she will be able to point you in the right direction with affordability issues. Just remember, that taxi driver business costs can be claimed against tax and is tax deductible, but this can impact on your net profit, which will be looked at to ascertain if you can afford a mortgage.
- 4. Seek the services of an independent mortgage broker who can access mortgages from the whole of the market, rather than one who is tied to a single bank or mortgage institution. As discussed above, different lenders have different criteria for their lending policies and as a self employed taxi driver, you will need as much flexibility as possible. Most lenders, for example, will only accept three year’s certified accounts whereas there are others who will accept two year’s or even one year’s accounts. It could also be a fact that what you earn is not always visible but, in these cases, it is essential that your earnings are transparent to your mortgage broker so that they can find you the lender that will suit your needs. The broker may also be able to find you a mortgage lender who will lend you more than the 4 or 5 multiples of your annual net earnings.
- 5. Deciding you want to buy your own property was the first step, but the most important step is preparation. Preparing in advance of applying for a self employed taxi mortgage is critical to your success. Find a mortgage broker maybe three or four months in advance of applying for a loan and they will help you get everything in order for a successful mortgage application.
- If you are in the area of Essex and require a Southend Airport Taxi then we recommend David’s Taxi service.
If you require anymore information about getting a self-employed taxi driver mortgage, please Contact The Mortgage Library, Beech House, 1 Journeymans Way, Temple Farm Industrial Estate, Essex, SS2 5TF or call 01702 899 072.