Could my newly self-employed husband trigger us a remortgage headache?

Our mortgage deal is ending in January 2025 and we will have around £50,000 remaining with eight years on the term. 

Our current rate is 2.46 per cent and we’re making £180 overpayments each month which should continue. 

Currently, the mortgage is in joint names with my husband who become self-employed in April. 

For remortgaging, he will obviously not have two or three years of accounts and figures generally required as proof of income although does and will have a steady stream of income. 

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I am employed and earn around £50,000 per year. My situation is unlikely to change as have been with the same employer for 27 years and will continue. 

Will our current lender, Lloyds – and other providers – consider re-mortgaging on my single income? Affordability should not be a problem. 

Also should we consider adding him on the mortgage in name only or leave him off completely? We have a safety net of around £25,000 in savings earning 4.1 per cent. J.F.

David Hollingworth replies: A crucial part of the process for any lender is to show that the mortgage will be affordable for the borrowers. 

That involves the mortgage lender assessing income and outgoings to get a better gauge on disposable income for the individual circumstances of the borrowers.

That process will require the income level to be evidenced which is generally a straightforward thing to do for those that are employed with a steady salary. 

Even then, there may be a need to show that any variable level of income will be ongoing and that there is some history to it.

> How to remortgage your home: A guide to finding the best deal 

Track record

The self-employed may well have a more variable income. That may be a result of seasonality to income levels or just the ups and downs of how busy the business is. 

That means that a lender cannot simply take a short snapshot to establish the ongoing likelihood of that being a regular income.

Lenders therefore look at the track record of self-employed income, typically over the course of two but possibly as much as three years. 

Some lenders can be more flexible and can consider as little as one year and contractors can be treated differently.

However, unless there’s some other circumstances that could support an application, you’re correct that your husband will not have built up sufficient track record to be able to demonstrate his income by the time your current deal ends.

> Is a two-year fix mortgage still a good bet?

Affordability

The good news for you is that you should still have plenty of options open to you. 

There also shouldn’t be any need to leave your husband off an application, which would also necessitate a removal from the property title. 

In fact, some lenders would not even consider an application where a previous party to the mortgage was removed but still resident. 

That stems from the potential rights which could affect the lender’s security if they ever had to repossess the property.

Your income should be more than enough to satisfy lenders’ affordability requirements. 

Although affordability is an individual assessment the maximum income multiple cap will usually be 4.5x your annual income or more.

As your income is on par with the mortgage amount you should have no problem in meeting affordability requirements for a new lender. 

Your existing lender wouldn’t require you to undertake a new affordability assessment in any case. 

Assuming that the switch is like-for-like and all payments are up to date they should allow you to switch to a new deal.

> True Cost Mortgage Calculator: Check what a new fixed rate would cost 

Watch the cost

However, it makes sense to take advice on the options available and a broker will be able to give you broader perspective on the whole market compared to any offer from your lender. 

With a relatively modest mortgage amount left it will be best to keep any fees to a minimum. 

Lenders will often offer higher rates without any arrangement and other incentives to reduce or remove the cost of remortgaging.

On a practical note, if you do decide to switch to a new lender, an adviser will also be able to help with the application. 

That will help ensure you can declare your husband’s newly self-employed status but also indicate that you don’t want to rely on his income, avoiding requests for evidence that he won’t yet have.

Although you could potentially consider reducing the mortgage balance further you should keep hold of an adequate cash fund in case of any ‘rainy days’. 

Your next rate will of course be higher than the current deal but if you can keep your overpayments up it will help slash the interest bill and repay the mortgage earlier.