Mortgages For Taxi Drivers

Let’s be honest – almost everyone wishes to purchase a property at some point, regardless of their profession.

On that note, applying for a mortgage is the first step that most people take to buy a new property. With the help of mortgage loans, the process of buying a home becomes more manageable.

However, some individuals may have to go through more hoops to buy their dream home than others. To be more precise, the amount of money a person earns can affect how easily they can get a mortgage.

In this regard, taxi drivers are some of these professionals who have to face considerable challenges when applying for a mortgage. But there’s no need to worry, for we have discussed how mortgages for taxi drivers work in this brief guide. 

So, read on if you are curious!

Can Taxi Drivers Apply For Mortgages?

Most people who are employed as taxi drivers in the UK have this question. Well, the simple answer is – yes, you can definitely apply for a mortgage if you drive taxis. 

There are around 127,000 taxi drivers in England at the time of writing this, and many of them have their own properties. So, if they couldn’t apply for a mortgage while working in this profession, then they would all have remained without a home of their own, which is clearly not the case.

However, driving a taxi for a living is a form of self-employment in most cases since the income is not fixed like a traditional employee. In other words, unlike a salaried professional, who gets a fixed amount of money for their work, there is no fixed standard for the money you can earn driving taxis. 

For example, if only a few people hire your taxi in a week, then your weekly earning will be very low.

On the other hand, if you get several fares in a single day, then your earning will be quite high for that day. Besides, the availability of other modes of public transport and the costs of maintaining your vehicle can affect the overall income too.

Naturally, this gives rise to financial uncertainties, which is why many taxi drivers feel sceptical about applying for mortgages. A similar level of scepticism is shared by the mortgage lenders as well, which is why they may not approve the mortgage loan as easily. 

But if you follow the guidelines properly and provide valid proof of income, then you can get a mortgage like any other employed individual.

How Do Lenders Assess Mortgages For Taxi Drivers?

The process that lenders follow for approving mortgages for taxi drivers is not any different from the process they follow for any other mortgage applicant. Most of them will check your income records, bank statements and credit records to assess your affordability and creditworthiness.

That said, the primary point of concern, in this case, is how thoroughly the assessment is done. As we have mentioned before, a taxi driver can be considered a self-employed individual who has a fairly high degree of financial uncertainty.

So, in order to approve the mortgage, the lender may require solid proofs of affordability that demonstrate a low financial risk.

These proofs usually include detailed accounting reports and employment history for the past two years at least. However, if you do some research, you may come across some specialist lenders who can approve mortgages with only a year’s worth of accounting records.

Aside from that, you may need to provide an SA302 form that proves your income. And once the lender is confident that you can afford the mortgage, they will approve the application and proceed further.

How To Apply For A Mortgage As A Taxi Driver?

In order to apply for a mortgage, you can follow the steps we have discussed below.

Step 1: Gather The Relevant Documents

First, you will need to collect all the documents that will be necessary for the application process. These documents include:

• Accounting details for the past two years or more
• SA302 forms
• Bank statements
• Identification and address proofs

Make sure the information on these documents is up-to-date and accurate. If there is any error, get it rectified before furnishing the document to the lender.

Step 2: Consult A Qualified Mortgage Broker

We strongly recommend that you get in touch with a qualified mortgage broker before contacting a lender.

You can get the credit records and financial documents checked by the broker, who can eventually guide you on the best course of action. They can even refer you to some specialist lenders who can approve the mortgage easily.

Step 3: Contact The Lender

Finally, you can get in touch with the mortgage lender usually via the broker. You can go with the lenders that the broker has suggested, or you can research a suitable lender on your own if you feel that is the way to go. 

If it’s the latter, then make sure to find an option with a positive track record for taxi driver mortgages. Furnish all the necessary documents that the lender asks for, and sign the relevant documents once the mortgage is approved to complete the process.

How Much Can You Borrow From The Lender?

Typically, the amount of money that you can borrow for financing a mortgage is dependent on the annual income you have. In most cases, the lender will allow you to borrow an amount that is around four-and-a-half times the annual income.

However, some specialist lenders may allow you to borrow as much as six times the annual income under the right conditions. On the flip side, if your financial records are not that satisfactory, the lender may restrict the borrowing amount to only two to three times your income.

Conclusion

Buying a property is possibly one of the most important purchases that you can make in your lifetime. That is why you need to be careful about the whole process, even if you are a taxi driver.

We understand that it might be difficult for such a professional to get a mortgage. But if you follow the guidelines we have provided here, you won’t face any major issues with the mortgage application process.

Also, we suggest hiring a broker who is highly skilled in mortgages. That way, you will get proper guidance every step of the way.

Your home may be repossessed if you do not keep up repayments on your mortgage.

All content is written by qualified mortgage advisors to provide current, reliable and accurate mortgage information. The information on this website is not specific for each individual reader and therefore does not constitute financial advice.