Can I Get a Mortgage When Self-Employed?

The short answer

Yes. Being self-employed does not put you in a separate mortgage category and it does not automatically mean a higher rate. Every high street lender and every specialist lender in the UK will consider self-employed applicants, and the products, rates and terms available are the same ones an employed applicant would see.

What changes is the evidence. An employed applicant hands over three payslips. A self-employed applicant has to prove a pattern of income, and every lender has its own rules about which figures it will count, how many years it wants to see, and what it does when one year is stronger than another. Two lenders looking at the same set of accounts can arrive at borrowing figures that differ by six figures.

How lenders decide what you earn

Your assessable income depends on how you trade, not on how much money passes through your business account.

• Sole trader or partnership: lenders normally use your net profit as declared on your SA302 or tax calculation, averaged over two or three years.
• Limited company director: most lenders use salary plus dividends drawn. A smaller group will use salary plus your share of retained net profit, which usually produces a much larger figure if you leave money in the business.
• Contractor on a day rate: specialist lenders will often multiply your day rate by five days and then by 46 or 48 weeks, ignoring your accounts entirely.
• CIS subcontractor: some lenders treat you as employed and work from your payment and deduction statements rather than your accounts.

How many years of accounts you need

Two full years of accounts or tax calculations is the mainstream requirement and the point at which the widest choice opens up. Three years gives lenders more comfort and occasionally unlocks better terms where income is rising.

One year is workable but narrows your options to a smaller set of lenders, most of whom will want to see a clear trading history in the same field beforehand, a healthy deposit and an accountant willing to comment on the year ahead.

Less than a full year of trading is very difficult for a residential mortgage and normally means waiting until your first set of accounts or tax return is filed.

Paperwork to have ready

Getting these together before you apply is the single biggest thing you can do to speed up a self-employed case.

• Two or three years of SA302s or tax year overviews, downloaded from HMRC
• Matching tax year overviews for the same years
• Finalised accounts prepared or signed off by a qualified accountant, if you trade through a company
• Three to six months of personal and business bank statements
• Details of any Bounce Back Loan or other business borrowing still outstanding
• Your accountant's name, qualification and contact details, as many lenders verify figures directly with them

The mistakes that cost people money

Minimising your declared income to reduce your tax bill is entirely legitimate, but it also reduces what you can borrow, because lenders work from the figures you filed. If a purchase is on the horizon, it is worth modelling the trade-off with your accountant a year or two ahead.

The other common mistake is applying directly to your own bank, being declined on their particular income rule, and leaving a hard credit search behind. We check lender criteria against your actual figures first and only submit where you fit.