Can you get a mortgage when self-employed?

Yes. Self-employed borrowers get mortgages every day, on the same rates and the same affordability rules as employed buyers. There is no separate product and no penalty rate for working for yourself. The only real difference is how you prove your income: instead of payslips, a lender works it out from your filed accounts and tax figures, then decides which of them to lend against.

What really decides a self-employed mortgage?

Being self-employed does not stop you getting a mortgage. What decides the outcome is whether a lender can read a stable, provable income from your figures, and whether you have approached one that reads your kind of income well. Those two things, not your employment status, are where a self-employed case is won or lost. A sole trader, a partner and a company director are all routinely approved. The job is to line your evidence up so the income is obvious and to put it in front of the right lender, which is exactly where planning pays off. Our wider guide to self-employed mortgages sets out how each lender works the figures.

How does a lender work out your income?

The method depends on how you trade, and getting the method right is often worth more than any rate. A sole trader is assessed on the net profit shown on their tax calculations, not on turnover, so a business with high takings but modest profit borrows on the profit. A partner is assessed on their share of the partnership profit. A company director is where the approaches diverge most: many lenders assess salary plus the dividends you actually drew in the year, while a smaller group assess salary plus your share of the company net or retained profit. If you pay yourself a modest salary and leave profit inside the company for tax reasons, the first approach can understate what you really earn, and the second can read it far more generously. That single difference in method is why the same accounts can support very different loans, and why matching the structure to the right lender comes before anything else. Our guide to company director mortgages works through each route in detail.

How long do you need to have been trading?

This is the question most self-employed buyers ask first. Most lenders want two full years of figures, and some ask for three, but a single complete year is often enough to start the conversation. A growing number of lenders will consider one year of accounts or one set of tax figures where the business is established and the income looks sustainable. If you went self-employed after doing the same work as an employee, some lenders will take that earlier experience into account too. Where you have two or more years, lenders differ on whether they take the latest year, an average of the last two, or the lower of the two if income has dipped, which again is a reason the choice of lender shapes the figure. A shorter record narrows the choice rather than closing the door. Our page on a mortgage on one year of accounts covers the shorter-history route.

How do lenders treat directors and retained profit?

Company directors are the clearest example of why lender choice decides the loan. Take a director who draws a £12,000 salary and £30,000 in dividends in the year, and leaves further profit inside the company. A lender that assesses salary plus dividends sees an income of £42,000. A lender that assesses salary plus the director's share of the company net profit, where the business made, say, £90,000 of net profit before the dividend was taken, can see a materially higher figure and lend accordingly. Same director, same accounts, a very different mortgage, decided only by which desk reads the case. This is why directors who retain profit should never assume a first decline is the market's answer. Our guide to a director retained profit mortgage sets out the lenders that work this way. These figures are illustrative only, not a quote, offer or advice, and any actual borrowing is subject to full lender assessment and status.

How is day-rate contractor income assessed?

Contractors on a day rate are often assessed on the contract rather than on last year's accounts. A common approach is to annualise the rate: the day rate multiplied by the days worked each week and by the weeks worked in the year. A contractor on £450 a day, working five days a week for around 46 weeks, annualises to roughly £103,500, and a lender lending at a multiple of that figure could support a loan well into the hundreds of thousands, on the current rate rather than on historic profit. Lenders that work this way usually want a reasonably continuous contract history and a contract with some time left to run, and the treatment can apply whether you contract through your own limited company or an umbrella arrangement. It is one of the most useful routes for a contractor whose accounts understate their true earning power. Again, these figures are illustrative only, not a quote, offer or advice, and any actual borrowing is subject to full lender assessment and status.

What does a lender need to see?

A self-employed application runs on documents, and having them ready and agreeing with each other is what most often keeps a case moving. Plan for your tax calculations, often called SA302s, with the tax year overviews that confirm the tax was paid, both from HM Revenue and Customs. You will also want your finalised accounts prepared by an accountant, and personal and business bank statements covering the last three months. Company directors should expect to show the company accounts as well, and contractors should have their current contract to hand. Where your tax figures and your accounts tell the same story, an underwriter can move quickly; where they do not line up, the case stalls while the gap is explained, so it pays to check they agree before you apply. Our guide to self-employed mortgage requirements sets out everything to gather before you start.

How much can you borrow when self-employed?

Once a lender has settled on your income, affordability works exactly as it does for an employed buyer. Most lenders work to an income multiple of around four and a half to five times your assessed income, then test that the repayments are affordable at a stress rate above the pay rate, with your other commitments taken into account. The figure they use is the provable, sustainable income from your accounts, not your turnover, so a business with high takings but modest net profit borrows on the profit. Because each lender can read the same accounts differently, the income one will lend against can be noticeably higher than another's, which is why the choice of lender shapes the amount you can borrow. You can put your own figures into our self-employed mortgage calculator, and our guide to how much you can borrow when self-employed works through the multiples in detail.

The question is almost never whether a self-employed buyer can get a mortgage. It is which lender will read your accounts the way your business actually works.

Will you pay a higher rate?

No, not for being self-employed. At the same deposit, property type and credit record you qualify for the same rates as an employed buyer, because the rate is driven by those things rather than by how you are paid. What being self-employed can do is narrow the panel of lenders willing to read your income a particular way, and that panel can shape the rate on offer, so a larger deposit helps by widening your choice. A deposit of around a tenth of the price opens the mainstream market, and more than that opens it further. The work is in finding the lender that reads your income well, not in accepting a worse deal.

How can you improve your chances of approval?

A few steps make a self-employed application markedly easier. Keep your accounts and your tax calculations consistent, because a mismatch is the most common reason a case slows down. Time your application for after a strong year where you can, since lenders tend to lend on the lower of two figures when income dips. Avoid taking on new credit in the months before you apply, and keep your business and personal banking tidy so the picture is easy to follow. If you draw a small salary and leave profit inside your company, look for a lender that counts retained profit, which can read your income more generously. Most of all, match your case to the right lender before you apply rather than after a decline.

How does Mortgage One help?

Mortgage One is a countrywide UK mortgage broker with access to plans from the whole of market, and we arrange self-employed mortgages as a regular part of the business. We work out which income figure each lender will use for your structure, pair your filing history and accounts with lenders comfortable with them, and present your case so an underwriter can say yes first time. We are authorised and regulated by the Financial Conduct Authority (FCA) for the mortgage advice, and we work alongside your accountant rather than across them, so the application reflects how your business is actually run. You must be on UK soil to receive advice, so we confirm your circumstances properly before recommending anything.

Frequently asked questions

Is it harder to get a mortgage when you are self-employed?

Not harder, but it asks more of your paperwork. An employed buyer hands over payslips and the income is obvious. As a self-employed buyer you prove the same thing a different way, through your filed accounts and tax figures, and the work is in presenting those cleanly to a lender that reads them well. Once the figures are clear, the decision runs on the same affordability rules as any other case.

How long do I need to be self-employed to get a mortgage?

Most lenders look for two full years of trading, and some ask for three, but a single complete year is often enough to begin. A growing number of lenders will consider one year of accounts or one set of tax figures where the income looks steady and the work is secure. A shorter record narrows the choice of lender rather than ruling you out, so it is worth checking the market before deciding to wait.

Can I get a mortgage on one year of accounts?

Yes, with a smaller pool of lenders. Some will lend on a single complete year of accounts or one set of tax figures where the business is established and the income looks sustainable, and a clean first year with a clear pipeline of work reads far better than an uneven one. Where you did the same work as an employee before going out on your own, some lenders give that earlier experience weight too.

How do lenders treat a company director who leaves profit in the business?

It depends which lender you approach. Many assess a director on salary plus dividends drawn in the year, so profit left inside the company is not counted. A smaller group will assess salary plus your share of the company net or retained profit, which can produce a much higher assessable income for the same business. If you draw a modest salary and retain profit for tax reasons, the second approach can change what you can borrow, so the choice of lender matters more here than almost anywhere.

How is day-rate contractor income assessed?

Many lenders will annualise a day rate rather than wait for accounts. A common approach is the day rate multiplied by the days worked each week and by the number of weeks worked in a year, which turns a contract into an annual figure the lender can lend against. This often lets a contractor borrow on their current rate from early in a contract, rather than on last year net profit, provided the contract history is reasonably continuous.

What deposit do I need when self-employed?

The same as an employed buyer. A deposit of around a tenth of the price opens the mainstream market, and more than that widens your choice of lender and eases the affordability test. There is no self-employed surcharge on the deposit. A larger deposit simply gives you more lenders to choose from, which matters more when your income needs a particular lender to read it the way your business works.

Does an accountant help my chances?

It can. Many lenders prefer accounts prepared or certified by a qualified accountant, and some will accept an accountant reference in place of certain documents. The bigger gain is consistency: when your accounts and your tax calculations tell the same story, an underwriter can move quickly. We work alongside your accountant rather than across them, so the application reflects how your business is actually run.

Can a broker improve my chances of being approved?

That is the heart of it. The same accounts can produce very different incomes across lenders, because each reads self-employed figures its own way. A broker works out which lender will read your structure most generously, matches your filing history to one comfortable with it, and presents the case so the underwriter can say yes first time. That matching is where most of the difference between a yes and a no is made.

Send us an enquiry

Send us an enquiry

Name

Email

Phone

Message

I have read and understood the Privacy Notice Send Enquiry

Checking your options won't affect your credit score.

Related

Self-employed mortgages The full guide to how lenders read self-employed income. Company director mortgages How salary, dividends and profit are assessed for directors. Director retained profit Lenders that count profit left inside the company. Mortgage on one year of accounts Borrowing on a single complete year of figures. How much can I borrow, self-employed Turning assessed income into a realistic loan. Self-employed mortgage requirements Everything to gather before you apply. Check your eligibility Five quick questions, about 60 seconds.

Think carefully before securing your debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.