Self-employed mortgages, explained in plain English
Working for yourself shouldn’t make getting a mortgage feel like a second job. Whether you’re a sole trader, a contractor or you run your own limited company, I’ll work out how lenders are likely to look at your income and find the ones that suit the way you earn.
Being self-employed doesn’t rule you out
Lots of self-employed people are told “computer says no” by a bank, or get a much lower figure than they expected. Usually that’s not because they can’t afford a mortgage. It’s because that particular lender reads their income in a way that doesn’t suit them.
Lenders don’t all treat self-employed income the same way. One might use your most recent year, another an average of two years. One might look at your salary and dividends, another at your share of the company’s profit. For a contractor, one might use your day rate while another wants to see full accounts. Choosing the right lender for the way you earn can make a real difference to how much you can borrow.
I’ve been a mortgage broker for nearly 20 years and I search more than 80 UK lenders. My job is to match your income to the lender that’s most likely to understand it, before you apply.
How lenders look at different types of self-employed income
Sole traders and partnerships
Lenders usually look at your net profit, as shown on your tax calculations (SA302s) and tax year overviews from HMRC. Some use your latest year, some average your last two. If your profit has gone up, the lender you choose matters.
Limited company directors
Many lenders use the salary and dividends you take out of the company. Some will also consider your share of the company’s net profit, which can help if you leave money in the business. Usually this applies if you own a significant share of the company.
Contractors
If you work on fixed-term contracts, some lenders will work out your income from your day or hourly rate rather than your accounts. They’ll usually want to see your current contract and some history of contracting in the same line of work.
CIS workers and mixed income
If you’re in the Construction Industry Scheme, or you’re employed and also run a business on the side, lenders vary a lot in what they’ll count. I’ll show you which lenders treat your mix of income most fairly.
How many years’ accounts do I need?
Most lenders like to see two years of figures. That’s the most common rule, but it isn’t the only option. Some lenders will consider applications with one full year of accounts or tax returns, especially if you were doing the same kind of work before you went self-employed.
If you’ve been trading for less than a year, options are more limited, but it’s still worth a conversation. Contractors, and people who’ve moved from employment to self-employment in the same field, can sometimes be treated differently.
What paperwork to get ready
Having your documents ready speeds things up and makes a good impression on the underwriter. Lenders differ, but this is what I’ll usually ask for:
- SA302 tax calculations and matching tax year overviews from HMRC
- Your latest accounts, ideally prepared by a qualified accountant
- Business and personal bank statements
- For directors: company accounts and details of salary and dividends
- For contractors: your current contract and any previous contracts
- Proof of ID and address
- Proof of where your deposit is coming from
- Your accountant’s details, if you’re happy for me to speak to them
Things that can help your application
Think about timing
If you’re about to file a stronger year, waiting until it’s on record with HMRC can sometimes help. If last year was quieter, an earlier application might work better. I’ll help you weigh it up.
Talk to your accountant
How you take money out of your business affects what lenders see. I’m happy to speak to your accountant so we’re all working from the same numbers. Tax advice is for your accountant, not me.
Check your credit report
A tidy credit file matters just as much when you’re self-employed. It’s worth checking your credit report before you apply, so there are no surprises.
You can also get a rough idea of borrowing and monthly payments with my mortgage calculators. Bear in mind that calculators can’t tell you how a lender will treat self-employed income. That’s where I come in.
How I help self-employed clients
A no-fee chat
Tell me how you work and roughly what you earn. A quick call or WhatsApp is fine.
I read your figures
I look at your accounts or contracts the way a lender would, and work out which lenders suit you.
Agreement in Principle
Once we know the right lender, I’ll arrange an Agreement in Principle so you can make offers with confidence.
Through to completion
I package the application, deal with the underwriter’s questions and keep everything moving.
My advice and appointments come with no fee and no obligation. A fee is only payable once you receive your full mortgage offer – see my fees.
No sick pay? Think about protection
When you’re self-employed there’s usually no employer sick pay and no death-in-service benefit to fall back on. If you couldn’t work for a while, your mortgage would still need paying. Income protection and life cover can help. I’ll look at what you already have and explain your options in plain English, with never a fee to you for protection advice.
Self-employed mortgage advice in Fareham and across Hampshire
I’m based at 10 Merryfield in Fareham and work with self-employed people right across Fareham, Whiteley, Locks Heath, Portchester, Gosport, Portsmouth, Southampton and the rest of Hampshire. Tradespeople, hairdressers, consultants, shop owners, IT contractors – if you work for yourself, I’d like to help. Everything can be done by phone, video or WhatsApp, so it works around your diary, not the other way round.
Buying your first home? See my first-time buyer guide. Have some credit issues too? Read about bad credit mortgages.
Frequently asked questions
Can I get a mortgage with one year’s accounts?
Sometimes, yes. Most lenders prefer two years, but some will consider one full year of accounts or tax returns, especially if you were in the same line of work before. I’ll check which lenders currently accept this for your situation.
Which figures will a lender use for a limited company director?
It depends on the lender. Many use your salary plus dividends. Some will consider your share of the company’s net profit instead, which can help if you leave money in the business. I’ll find the approach that best reflects what you earn.
Can contractors get a mortgage based on their day rate?
Some lenders will work out your income from your day or hourly rate instead of your accounts. They usually want to see your current contract and a history of contracting. Criteria vary, so it’s worth getting advice first.
What documents do self-employed people need for a mortgage?
Usually SA302 tax calculations and tax year overviews, your latest accounts, bank statements, ID and proof of deposit. Directors may need company accounts, and contractors their contracts. I’ll give you a checklist for your lender.
Will I pay a higher rate because I’m self-employed?
Not necessarily. Many self-employed people get the same mainstream rates as employed borrowers. The rate depends on things like your deposit, your credit history and the lender, rather than simply being self-employed.
Do you charge a fee for self-employed mortgage advice?
Your first chat and advice come with no fee and no obligation. A fee is only payable once you receive your full mortgage offer. My fees are listed on my mortgages page, so you’ll know where you stand from the start.
Don’t take my word for it
Self-employed and ready to talk?
Tell me how you work and what you’d like to buy. I’ll give you an honest view of what lenders are likely to offer, and the best way to apply.
Or email contact@easy-mortgages.co.uk, WhatsApp 07368 330822, or use my contact form. Monday to Friday, 9am to 7pm.
Easy Mortgages Limited (FCA 972959) is an appointed representative of Mortgage Intelligence Ltd, which is authorised and regulated by the Financial Conduct Authority (FCA number 305330). 10 Merryfield, Fareham, Hampshire, PO14 4SF.