Mortgages for self-employed

When it comes to self-employed mortgage applicants, lenders assess individuals based on different categories. Let’s break them down:

1. Limited company:

If you own a registered limited company, your salary and dividends matter. Lenders will want to know the extent of your earnings when applying for a mortgage.

2. Business partner:

If you have one or more business partners, mortgage lenders will require proof of your share of the profits.

3. Sole trader:

Contractors and freelancers often fall under the category of sole trader. In this case, you’ll need to complete a tax self-assessment, which should be endorsed by an accountant. To verify your income, you’ll also need to provide your mortgage lender with an SA032 form.

When applying for a self-employed mortgage, you have to be able to show you have had consistent income for at least two full tax years.

Some lenders may even require three. The specific time will depend on who you choose to use for your mortgage.

Usually, 4 to 5 times your annual salary. However, your deposit and how much you make can also impact how much you will be approved for.

You can use our mortgage calculator to get a better idea of the mortgage you could qualify for.

It’s always a good idea to put as much down as you can for a deposit so that you have more options.

Getting a mortgage when you’ve been self-employed for less than 2 years isn’t impossible, but it can be challenging. Many lenders prefer a minimum of 2 years of income history for self-employed applicants.

However, if your earnings for the single year are substantial enough for the desired mortgage, and your current income shows consistency, some lenders would consider your application.

To boost your chances, providing proof of upcoming work contracts for the coming year can strengthen your case and demonstrate a steady flow of income. While it may require some effort, with the right financial documentation and a solid income track record, you can increase your likelihood of qualifying for a mortgage as a self-employed individual.

Securing a self-employed mortgage can indeed present additional challenges due to the requirements involved. However, it is not impossible!

The key focus is demonstrating the consistency and reliability of your income. To instil confidence in lenders, it’s crucial to provide ample evidence showcasing your ability to meet mortgage payments and manage financial responsibilities effectively.

By showcasing your financial stability, you can build trust and convince lenders of your capability to handle the mortgage commitment with confidence.

Absolutely! Getting a 95% mortgage is definitely possible. Be ready to give ample proof that you are capable of paying for your mortgage. This means providing extra documents like tax returns, business accounts, and bank statements to back up your income.

When applying for a mortgage, you will need to provide various documents to support your income and financial situation. Here’s a list of the documents you may be required to provide:

• Two or more years of certified accounts, which demonstrate your financial history and stability.
• SA302 forms and a tax year overview from HMRC, covering the past two or three years, serving as proof of your tax filings and income.
• Evidence of upcoming contracts, if you work as a contractor, showcasing your future income prospects.
• Evidence of dividend payments or retained profits, if you’re a company director, highlighting the financial performance of your business.

In addition to income-related documentation, you will also need to provide the following documents:

• Passport and driving licence for identification purposes.
• Council tax bill and utility bills dated within three months, to verify your residential address.
• Six months’ worth of bank statements, which lenders will review to assess your financial commitments and ability to afford mortgage repayments.
• When examining your bank statements, lenders may inquire about various expenses, including household bills, travel and commuting costs, childcare expenses, holiday expenses, socialising costs, hobbies, credit card and store card repayments, loan repayments, as well as any car finance agreements or catalogue credit accounts.

As long as you can prove that your income is consistent and reliable, it doesn’t matter if you are self-employed or not.

However, while you may not have to pay higher interest rates, you will have to give plenty of evidence of your income reliability.

Yes! As with any mortgage, you will both have to show proof of income for at least 2 full tax years.

However, if your self-employed partner is ever not able to pay their half of the mortgage, it would be your job to pay the total monthly payment.

Getting approved for a mortgage when you’re self-employed isn’t the easiest thing to do. Here are a few tips that could help you to get approved:

• Provide certified accounts prepared by a qualified chartered accountant to showcase your financial reliability.
• Highlight the average profit you’ve earned over the past few years, as lenders often focus on this aspect.
• Deposit as much as possible, as a larger deposit can enhance your credibility and reduce the risk for the lender.
• Build a good credit history by ensuring timely payments on existing credit accounts and managing debts responsibly.

Consider using a specialist broker if mainstream lenders are hesitant, as they can help you find lenders who are more open to self-employed applicants and increase your chances of securing a mortgage.