Taxi Driver Mortgage

How are taxi drivers paid usually paid?

As a taxi driver, you will be likely be self employed which can make getting a taxi driver mortgage more difficult if that is the case rather than working for an established taxi firm on their pay roll.

If you are self employed, you may not have regular hours. Your accountant may have been able to deduct certain costs from your turnover resulting in it looking like you have earned less than perhaps a taxi driver that is employed on the payroll of a firm. This may sometimes seem unfair as an employed taxi driver will also have costs in day to day life that are not deducted from their profit and paid from their net income instead.

For self employed taxi drivers, mortgage lenders will need to get an idea of how your income and work is made up through driving. The hours, regularity and a view of what is expected in the future in terms of hours and income.

They will need to understand your profits from taxi driving and assess what the income is expected to look like monthly to forecast whether you are on track to meet similar numbers again in the future.

Depending on the financials, it is definitely possible for a taxi driver to be successful in getting a mortgage.

What are the challenges for a taxi driver looking to get a mortgage in the UK?

Working as a taxi driver, in most cases you will be self employed which can sometimes make things more difficult when getting a mortgage. This is not the case every time and going to the right lender can help you be successful in getting the mortgage through.

Your company accounts (if you trade as a limited company), business bank accounts and personal accounts are likely to be asked for to get an overview of how the business is performing to help make a lending decision.

It is not uncommon for lenders to be quite thorough when assessing your income as a self employed taxi driver. They are looking to have confidence in how your business is going to perform in the future. They often look at patterns, they make sure income is remaining steady and consistent. Also often want to know how you were affected by things that were outside of your control, e.g. the COVID 19 pandemic.

How many years of business accounts do taxi drivers need to get a mortgage in the UK?

The most commonly asked for amount is two years however there are some lenders that can accept applicants with just one year of business accounts. With some of the lenders that only need one year of accounts. Those lenders may ask more about what you were doing before your position as a self employed taxi driver to gain confidence in your sustainability in earning a steady living as a taxi driver going forward.

Lenders underwrite self employed income in different ways. Some lenders will average the income, some will take the latest year income and some would use net profits of a limited company rather than the drawn dividends (if you are set up as a limited company). Your mortgage broker would assess your financials and then choose a lender accordingly based on these numbers to give you the most suitable lending solution.

It may be that your lender will need to speak with your accountant for further information on your business, if any support taken during COVID and if so, what it was, any outstanding business loans, confirmation of all numbers and projections going forward so they can understand future income of your business.

If you plan to handle your tax yourself rather than use the services of an accountant, you can find out more information here on Self Assessment.

How much can I borrow on a mortgage as a taxi driver in the UK?

The answer to this will really depend on the lender, if you’re set up as a sole trader, they would use your net profit before tax and use a multiple of this figure, up to a maximum of around five times this profit. There is much more that needs to be taken into account though when assessing your affordability so your mortgage broker would need to confirm this with you.

Your broker would need to assess factors like your deposit amount, your dependants, loan and card balances, car lease payments, monthly commitments and overall credit score to get an accurate idea of what you may be able to borrow.

To find out more about your credit score, you can do this by visiting Check My File.

Would I need to use a specialist lender to get a UK mortgage as a taxi driver?

You would not always need to, high street lenders will lend to drivers like any other occupation. How you get paid, your annual profits, your credit file, debts to income ratio etc are all factors that an adviser will need to assess when deciding whether you would get a mortgage from the high street or need a specialist lender so best to always get advice from a professional broker.

More often than not, a high street lender would have better products than a specialist lender so let your broker work out your options for you before proceeding with a lender.

What documents would I need to collate for a lender to get a UK mortgage a taxi driver?

A self employed taxi driver would be usually be required to collate business accounts, tax documents such as tax calculations and tax year overview statements and bank statements for both the business and personal.

It may also be that the lender writes to your accountant for a more information about your business but this is not the case on every application.

If you are an employed taxi driver, the lender will likely ask for your latest 3 months of payslips, a P60 and personal bank statements to verify your income as a taxi driver.

Every lender may have a different process and your mortgage broker would confirm the required documents when you speak with them.

Could I get a buy to let mortgage working as a self employed taxi driver?

Absolutely, if you’re working as a taxi driver, there’s no reason why you wouldn’t get a self employed buy to let mortgage for an investment property in the UK. Buy to let mortgage lenders have different criteria around your income, your landlord experience, the deposit that’s required, your credit etc but your position as a self employed taxi driver will be viewed the same as any other self employed position.

Lenders will need to know your financials and be comfortable that all meets criteria but there is no reason it would stop you from getting a mortgage to buy a buy to let property with a mortgage if criteria was met.

If you plan to buy an investment property, bear in mind that you will need to declare your rental income to HMRC.

My taxi business did not perform so well during COVID 19, can I still get a mortgage?

How COVID negatively affected your business is viewed in a different way from lender to lender. E.g. if you took government grants due to your taxi business not performing so well as a result of not being able pick up customers, some lenders will deduct the government grants from the net profits of the business and work out affordability based on this end number.

Others decide to allow them to be included within the net profit of the business as long as they are comfortable that the businesses financials are back in line with where they should be and the government grants were just bringing the profit up to the usual figure of where it would have been had the pandemic not happened.

This is an area where you should take advice as a professional mortgage broker will look at the full scenario and approach a lender that can look to lend based on your situation. If you want I NEED ADVICE to arrange a free consultation, please complete the contact box.

I am working as a taxi driver and have adverse credit, could I still get a mortgage?

It will depend on lots of different factors and every lender will look at things differently. Your job as a taxi driver will not be largely irrelevant but more the information on the adverse credit (e.g. was it missed payments, defaults, debt management plans, county court judgements, bankruptcy, etc) your credit score, the amount of your deposit, your income, the performance of your business, your commitments and people dependent on you.

If the only outcome is a bad credit mortgage, it will usually mean the rates and fees for this type of mortgage are higher than that of a normal non-adverse product.

The adverse area is complex so best to speak with a professional mortgage broker that can analyse your situation and work out any options that are available to you.

Conclusion

As the article has hopefully illustrated, if you are a taxi driver working in the UK looking for a mortgage, this is definitely possible.

It will be decided upon the strength of your business and a full overview of you personal situation so speaking with a professional mortgage broker that can explain your options is prudent.

Make sure that the firm of mortgage advisers that give you advice is on the FCA register.

If you would like I NEED ADVICE to arrange for a professional mortgage broker to give you a free consultation, please complete the contact form.