Mortgages for taxi drivers are often far from simple. If you’re an employed driver, then finding a mortgage should be straightforward. This is because you’re able to present payslips to lenders in order to satisfy their income assessments. Being a self-employed taxi driver poses problems for this reason alone. Proving your income to a lender can be a struggle, as there aren’t any payslips to present, just accounts.
Having a mortgage broker that has the experience of dealing with taxi driver mortgages can be very useful. Our specialists secure mortgages for taxi drivers regularly. A lot of the success is a result of how well mortgage applications are structured.
How are mortgages for taxi drivers assessed?
Being self-employed certainly has its perks, but it can also cause a fluctuation in what you earn. It’s the same fluctuation in income that can cause lenders to worry. For instance, taxi drivers will write off tax-deductible expenses such as fuel, vehicle maintenance and insurance.
This is great as it reduces your tax bill, but on the other hand, it also reduces your net income amount. This isn’t great for when you need a mortgage, as lenders will use your net profit to calculate affordability. This can cause huge issues for when you need to borrow a specific amount to secure a property.
Lenders will make other assessments, such as credit checks and any other outstanding loans you have for example. If you have financial arrangements for cars or have had credit issues, this will make getting a mortgage even more difficult. Remember, getting a mortgage under these circumstances isn’t impossible. Our advisors specialise in ‘hard to place’ mortgages and have secured deals for borrowers who have previously been declined.
Does the type of mortgage make a difference?
If you need a buy to let mortgage, then some lenders may accept borrowers without having to prove their income. This is because certain lenders make assessments on the rental income that the buy to let can potentially generate. That said, if you’re a taxi driver, then you’ll want to be sure you’re approaching the right lenders. Approaching lenders who do make assessments on income could result in your buy to let application being refused.
Mortgage advisors will have the knowledge and understanding of which lenders will make assessments without proof of income, so it’s still important to utilise a broker under these circumstances.
If you’re a taxi driver in need of a residential mortgage, then lenders will need to assess your income as a mandatory requirement. What you earn on an annual basis will more than likely vary to what you declare on your accounts. This can be frustrating, as you know you’re more than capable of taking a mortgage on. Nonetheless, lenders will need to see clear evidence that your income meets the affordability of the mortgage you’re applying for.
Certain lenders will be better suited depending on your own financial circumstances and the amount you need to borrow. This brings us on to our next point.
How much can I borrow as a taxi driver?
If you’re a self-employed taxi driver, then most lenders will calculate your affordability based on 3-5x your declared net profit. The reason why lenders vary in how they make assessments simply depends on their appetite for risk. Lenders that offer more flexibility may stretch to 5x your net profit figure. In comparison, lenders that are less flexible may only calculate your maximum mortgage amount to 3x your net profit figure.
This is yet another reason why having a mortgage broker by your side can be vital. If you’re looking to borrow 4-5x your net profit amount, then we’d highly recommend consulting an advisor. This is so that your application is put forward to lenders that suit your criteria. Our advisors specialise in taxi driver mortgages and can structure your application in the best way possible. Even if you’ve only filed one year’s accounts, there are lenders available that may accept your application.