Alex Newbold is a Mortgage and Protection Consultant at Grayling Mortgage Solutions Limited

Mortgages have never been in the news as much as they have over the past couple of months. With rising interest rates, and house prices beginning to fall, people often assume that they won’t be able to borrow enough to buy a new home. These hints and tips are just a little beginners guide to Mortgages for those in the Entertainment world, and you never know, you could be buying a home sooner than you think!

1) Prepare Yourself 

 Just to warn you, the mortgage application process can feel a bit intense. Banks and Building Societies will ask for a lot of documents and they’ll do a thorough check of your credit history, so get one step ahead of them and have a look at yours. All credit commitments such as credit cards, personal loans and buy now pay laters will be taken into account so make sure you dig out all of the details about them. Don’t forget to disclose them all… lenders find everything! Don’t just look at your credit score, your credit report is more important. Credit scores can be affected by all sorts of things, so it’s important to know what’s affecting that score. People with lower credit scores can still get a mortgage, but not all lenders will be comfortable with every reason, so have all details of any missed payments or adverse credit to hand.

2) What Do I Need? 

The majority of people within the industry fit into the Self Employed Sole Trader category. Lenders will usually want to see your last two Tax Returns and calculate how much you can borrow from these - remember the number that they will use is Net Profit figure. If you operate as a limited company, they will also need your most recent limited company accounts, or if you’re on a full time and permanent contract, then it will be your payslips. If you’re on a show which is a Fixed Term contract, you may be able to use the contract in certain situations, but do bear in mind that most lenders will want you to have been doing this for at least a year. As well as this, lenders will also want to see your last 3 bank statements, and proof of your deposit, plus your basic ID requirements. 

3) Information is Power 

Finding out how much you can borrow is a good place to start. Many people we speak to have no idea how much they can borrow - meaning that those Rightmove searches can be way out! If you have an idea of what your mortgage could be, and how much it will cost, you can avoid wasting time and make sure you’re only looking at homes within your budget.

4) Timing is Everything 

The timing of your mortgage application can be tweaked to your advantage. If you’re self-employed and have had a good year of work, you may find that waiting until after April 5th will enable you to submit a new tax return. If it’s better than the year before, then you may find that you may be able to borrow more! Timing can also be important with other borrowing. Be careful about applying for other forms of credit such as a new car loan or credit card just before your mortgage application. We recommend trying to avoid applying for any new credit for three months before a mortgage application, unless of course it’s necessary.

5) What about Covid? 

Obviously Covid had a huge part on the entertainment industry, and many people’s income will have been impacted in 2020/21. Hopefully people will have been able to submit a new tax return since then, but certain lenders may be able to look past that now. Lenders will want to know if you have received a SEISS grant, so make a note of this, but as long as you’re earning an income again, most will be comfortable with it now.

6) Budget, Budget, Budget 

Set one for yourself to know what your limits are. Your mortgage payments are taken monthly and they will likely be your biggest expense, but there are other costs alongside buying a house. Don’t forget you’ll now be responsible for paying council tax, home insurance, utilities and life insurance. It can all add up, and you want to make sure there’s still some left over at the end of the month to have some fun, so run a quick budget planner to check you’re comfortable.

7) Do I need an accountant? 

This is a question I get asked a lot. You don’t need one… but it does often help. Accountants will ensure that your accounts are submitted properly, using accurate figures for a mortgage application. With some lenders, and with complex applications, lenders may want to verify someone’s figures with an accountant - whether you currently have one or not.

8) I pay my rent every month, why can’t I get a mortgage? 

I know! And I hear this everyday! AND I agree with you! But let me at least try and explain a bit about why. Lenders will do something called their “due diligence” to make sure that this mortgage will be affordable to you. When you own your property, there are very large sums of money in play - both your deposit and your mortgage that you owe to the bank. If you were to struggle to keep up with your mortgage repayments, the worst case scenario would be that your home could be repossessed, resulting in much more serious consequences than if you missed your rental payments.

9) The theatre industry

It is worth bearing in mind at this point, that the theatre/entertainment industry is UNIQUE. For some contracts you may be paid self-employed, for some you may get paid on a PAYE basis. Some contracts will last for 2 weeks, some will last for 18 months. You may have little jobs on the side, and for those working on cruise ships, you may not even get taxed for your income. We don’t see this in any other industry in the world, so be patient as not all lenders will understand your income structure. This is where a mortgage adviser will help, as they know how to break this down and ensure the banks understand how the industry works.

10) Final tips 

• Make sure you still have a small cash reserve. This is always a great tip - but especially in the entertainment industry. We’re all used to having those moments “in between work”, but it can be bad timing if your mortgage has just started. Always aim to have the equivalent of 3 monthly payments stashed away.

• Register to vote - even if you don’t have an intention of voting, we will leave that up to you, being on the electoral roll will actually improve your credit score.

• Is your address updated? - Lenders will want to see proof that you live at your current address, so check out where your bank statements and driving licences are registered to.

• Make sure you pay your bills on time. It sounds so simple, but a missed payment can sometimes be the difference between accept and reject. Adverse credit will stay on your credit file for 6 years so it is worth keeping on top of the finances.