Getting a Mortgage When Self-Employed

Being self-employed doesn’t mean you can’t get a mortgage, but you may need to provide more evidence of your income. Whilst employed applicants get assessed using their payslips, for the self-employed lenders want to see that your earnings are sustainable through bank statement, business accounts or tax returns.

How Many Years of Accounts Do You Need?

Most lenders require at least two years of trading and business accounts or tax returns. Some will consider applicants with just one year (if you have a track record in the industry you work in).

You’ll typically need:

• Tax calculations (used to be called SA302 forms) and Tax Year Overviews from HM Revenue & Customs

• Profit and loss for sole traders and partnerships or Business accounts for limited companies

• Recent business and personal bank statements

How Lenders Assess Income

How your income is calculated depends on your structure:

• Sole traders: Usually based on average net profit over the last two years

• Limited company directors: Often assessed on salary plus dividends, some lenders also consider profit depending on your shareholding

• Contractors: Can be assessed using your day rate multiplied by working days and weeks per year

If your income is rising, some lenders may use the most recent year’s figures

How Much Can You Borrow?

Most lenders offer around 5 times your annual income, depending on:

• Credit score

• Deposit size

• Existing financial commitments

• Age and mortgage term

Tips to Strengthen Your Application

• Keep accounts up to date and filed on time

• Maintain a strong credit profile

• Keep you income as high as possible to reflect what you actually do

• Save as much as possible (larger deposits of 10/20% or more tend to get easier underwriting)

• Use a broker familiar with self-employed cases

Final Thoughts

Getting a mortgage when self-employed is very achievable and preparation is the key. With organised accounts, stable income, and good credit, you can access many of the same mortgage options as employed applicants.