Getting a Mortgage in a Partnership

Being self-employed won’t stop you from getting approved for a mortgage, but if you are in a partnership, there are specifics to bear in mind when applying for one. Here, you will learn how mortgage lenders assess applicants in business partnerships, how to get the finance you need, and much more.

Can you get a mortgage in a business partnership?

Yes. Many self-employed people are classed as being in a “partnership” and this won’t affect your chances of getting a mortgage. In fact, the process won’t be much different to that of a sole trader or an applicant in full-time employment, but there are specifics to be mindful of.

Firstly, the way your income is assessed is slightly different and things can be more complex if you are in a limited liability partnership (LLP), rather than a regular one, but it’s important to remember that you should have access to the same mortgages as everyone else.

Some lenders are, however, better equipped at catering for applicants in partnerships than others. There are also specialist mortgage brokers who specialise in your trading type, which makes them ideally placed to offer bespoke advice and help you find one of these lenders.

How affordability will be assessed

This is the main difference mortgage applicants will find if they ply their trade in a partnership. Your mortgage provider will want to know what share of the business is allocated to you, and most will base the affordability assessment on net profit with this figure in mind.

Most lenders will want to see 2-3 years’ accounts to evidence this (although some may accept less). They will take an average of your income over this time period and multiply it by 4.5 to arrive at your maximum mortgage borrowing. Some mortgage providers use a high income multiple than 4.5, right up to 6 times income, under the right circumstances.

Certain mortgage providers also consider other sources of income, such as drawings, salary, dividends and retained profit, which could increase the amount you can borrow.

As proof of income, expect the lender to request to see your business accounts, and/or your SA302 year-end tax calculation from HM Revenue & Customs (HMRC).

Other criteria you will need to meet

The other eligibility requirements partners need to meet are barely any different to other types of self-employed mortgage applicants. You can find them summarised below:

• How long you have been trading for: Most lenders will want to see 2-3 years’ trading history from your partnership, but some will consider applicants with just one year.
• Industry track record: Having prior experience in the same industry can improve your prospects, especially if you have less than two years’ accounts to declare.
• Steady income: It can be more difficult to get approved for a mortgage in a partnership if your business made a loss in the last year or has declining profits.
• Deposit amount: Deposit requirements for business partners are the same as applicants in full-time employment. It is possible to get approved for a mortgage with 5-10% of the property’s value, but putting down more could mean a better deal.
• Other requirements: The eligibility assessment will also review factors such as your credit history, age and the property type. You can read about how these variables can impact your chances of mortgage approval through the links provided.

If you don’t meet any of the above requirements, it is important that you speak to a mortgage broker before deciding on your next move. They often have access to specialist lenders who understand the needs of business partners and can be more flexible with their criteria.

How to get a mortgage in a partnership

Follow the steps below to get started on your mortgage journey with Teito:

Have your income proof ready: Having your SA302 or end-of-year business accounts to hand can help save time. You will also need three months’ bank statements, proof of address and proof of ID to present to the lender.

Compare rates and deals: You can use Teito to source a mortgage deal that fits your needs for free. Our service lets you view rates and deals from across the market.

Speak to a mortgage broker: Once you have chosen a mortgage, one of our brokers will contact you for a free, no-obligation chat to offer advice and ensure your application goes smoothly. Choose your preferred option below to get started:

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Which mortgage lenders are available?

All mortgage lenders who consider applications from self-employed applicants will lend to someone in a partnership, assuming they meet the rest of their criteria.

Some lenders, however, take a specific approach for borrowers who are in a partnership. You can find examples of them and some of the criteria they use below:

• Accord mortgages: Will request three years’ accounts, but will consider applicants with two and a projection for the next year if they have not been trading for that long.
• Beverley Building Society: Will let partners declare all sources of income, including profit, drawings, salary, dividends and retained profit.
• ESBS: Can based the affordability assessment on just the latest year of trading if the business shows evidence of year-on-year profitability.
• Foundation Home Loans: Will lend to borrowers who are in business partnerships and consider applications based on just one years’ accounts.

There are a wide range of mortgage lenders available for borrowers who trade in business partnerships and the above is a snapshot for example purposes. You can compare interest rates and deals from these lenders and for free on Teito - get started here.

Will the interest rates be any different?

Applying for a mortgage in a partnership won’t have an impact on your interest rate, as employment situation is not a factor that determines mortgage rates.

The rate you qualify for will depend on how much deposit you can put down (the more, the  better) and your credit situation (the cleaner, the better). The type of mortgage product you choose will also be relevant - for instance, variable mortgages usually have different rates to fixed agreements, and ones with a product fee attached can have lower rates.

Can you get a mortgage in a limited liability partnership?

Yes. You will have only slightly fewer mortgage lenders available to you if you are in a limited liability partnership (LLP). Mortgage providers who can cater for this often carry out more scrutiny around the application, specifically in the following areas:

• How the LLP was set up: Your lender will be keen to know how many partners/directors/shareholders are involved and how the profits are split.
• Why it was set up: If it is a special purpose vehicle (SPV) for investing in property, they will want to see personal guarantees from all directors.
• Any debts the LLP has: It is still possible to get approved for a mortgage if your business is carrying debt, but the nature of the debt is likely to be scrutinised.
• How long the partnership has been trading: The requirement for 2-3 years’ trading history can be more stringent for limited liability partnerships.

Buy-to-let mortgage applications involving LLPs are far more common than residential, since many of these partnerships are established solely for property investment. With these agreements, some lenders will seek assurances that the individuals involved in the business (rather than the company) will be personally responsible for the mortgage debt.

Rates and deposit requirements can be higher when members of an LLP are taking out buy-to-let agreements, but this is generally true of all investment mortgages.

Why choose Teito for your mortgage needs?

You can compare mortgage rates and deals from across the market with Teito, and get expert advice from a broker who specialises in mortgages for people in partnerships.

Here are just some of the reasons people who trade as part of a partnership choose us:

• Exclusive rates and deals are available
• Are mortgage brokers specialise in self-employed customers
• We are 5-star rated on leading review websites
• It takes just minutes to secure your mortgage in principle

Ready to start comparing rates and take advantage of a free, no-obligation chat with a specialist mortgage advisor? Get started here.