Self-Employed Mortgages

There are additional challenges to getting a mortgage while self-employed as you need to demonstrate reliable income. There are many different ways to do this, however, so it’s certainly not impossible! Being prepared well in advance will make the process far smoother, so do get in touch with our friendly advisors for their advice.

A self-employed mortgage lender will consider you to be self-employed if you have a 20% or higher share in the business that provides your main income. This income can be comprised of both salary and dividends and applies to you whether you’re a sole trader, company director or contractor.

Self-certification (or ‘self-cert’) mortgages were designed for the self-employed to allow them to self-certify their annual income without needing to provide evidence. Following the financial crash, these were removed in 2014 over concerns that unaffordable mortgages were being provided by self-employed mortgage lenders. Now all lenders require proof of income.

The mortgage products available to someone who is self-employed and someone employed by a company are identical, but the application process contains some differences. A self-employed person will need to prove they have a reliable income and provide additional information and documentation.

As long as you can prove your income is reliable, your mortgage rates should be identical to someone with a similar salary in a permanent, full-time job. Your mortgage rate will primarily depend on your credit rating and the size of your available deposit. Our advisors can help you prepare for your application well in advance to ensure you get the best rate possible, so do get in touch for their advice.

In addition to all of the usual documentation you would need to provide in a mortgage application, a self-employed mortgage lender will usually need 2-3 years of accounts assembled by an accountant, your tax computations and tax year overviews (formerly known as SA302 forms), and clear details of all outgoing payments and outstanding debt repayments. If you only have 1 year of accounts, don’t worry! With a strong track record, we should still be able to help you find a suitable mortgage.

As with any mortgage, the best ways to improve your chance of acceptance are to have as large a deposit as possible and a good and accurate credit rating. Being on the electoral roll is also an advantage, and avoiding properties above commercial premises or old and unusual properties will help too as lenders are less willing to lend for these types of property.

For self-employed mortgages, we highly recommend being prepared well in advance. Even if you’re just considering your options, do get in touch with one of our advisors.

The most common problem in getting a mortgage while self-employed is only having one year of accounts or a sudden large increase in income. Not all self-employed mortgage lenders find this a problem however, so please get in touch for advice if you want to understand all of your options.

This will vary depending on your circumstances – you can use our mortgage calculator as a rough guide but please call us if you’d like a more accurate figure.

There is no minimum income required to qualify for a mortgage, but lenders will use affordability tests that typically require an income of at least £10,000 per year in order to borrow a significant sum at a good rate.

Yes! There will still be the same challenges of proving your income, but whether this is your first or your tenth house we will be able to help you find the best mortgage deal for your circumstances. Take a look at our First-Time Buyer page for more information on what you will require as a first-time buyer, or call us for advice more specific to your situation.

You shouldn’t be penalised for becoming self-employed as long as you can prove a reliable income. If you have 2-3 years of accounts available then the full market should be open to you, but with just 1 year and a good track record we should still be able to find you a deal with a self-employed mortgage lender.