Self-Employed Mortgage Guide | An Insider’s Guide to Getting a Mortgage When You Work for Yourself. Thinking about getting a mortgage as a self-employed professional? You’re not alone. More than 4 million people in the UK are self-employed, yet many worry that their career choice makes it harder to get on the property ladder than it should be. The good news is it doesn’t have to be.
If you run your own business, work as a freelancer, or are a contractor, you may already be aware that lenders view your finances a bit differently. Instead of relying on payslips and employer references, they’ll dig into your accounts, tax returns, and overall financial stability. That extra scrutiny can feel intimidating, but with the right preparation and guidance, securing a mortgage while self-employed is absolutely achievable.
This insider’s guide will walk you through everything you need to know: from how lenders assess self-employed applicants, to the documents you’ll need, to the common pitfalls to avoid. You’ll also discover practical tips to strengthen your application and improve your chances of being approved the first time.
Whether you’ve just started thinking about buying your first home, are looking to remortgage, or want to invest in property through your business, this guide is designed to cut through the jargon and give you clear, practical advice.
Who Counts as Self-Employed?
In mortgage terms, you’re generally considered self-employed if you own 25% or more of a business or don’t receive a regular salary via PAYE.
Self-Employed Categories
| Employment Type | Description |
|---|---|
| Sole Trader | You run your business as an individual and keep all profits after tax. |
| Limited Company Director | You operate a business as a company and pay yourself salary/dividends. |
| Contractor | You work on a contract basis, often through a limited company or umbrella. |
| Freelancer | You offer services to multiple clients, often in creative or tech fields. |
| Partnership | You’re part of a business run by two or more people sharing profits/losses. |
Common Myths About Self-Employed Mortgages
| Myth | Truth |
|---|---|
| “You can’t get a mortgage if you’re self-employed.” | ❌ Totally false. You can get a mortgage – you just need to show evidence of income. |
| “You need 3 years of accounts.” | ❌ Not always. Some lenders will accept 1 or 2 years with other supporting evidence. |
| “Lenders don’t like self-employed people.” | ❌ Lenders just need proof of income and stability. Many have products specifically for self-employed borrowers. |
| “I can’t use retained profits.” | ❌ Some lenders will consider retained profits, not just salary + dividends. |
What Do Lenders Look For?
Lenders want to ensure that you can afford your mortgage repayments and that your income is sustainable.
Key Factors Lenders Assess:
| Factor | What it Means |
|---|---|
| Length of Self-Employment | Typically, 2-3 years’ trading history is ideal – but some accept 1 year. |
| Income Consistency | Stable or increasing profits over time will work in your favour. |
| Credit History | Clean credit will help. Any issues? Get advice early. |
| Deposit Size | The more you can put down, the better your options and rates. |
| Business Type & Sector | Some sectors are seen as more stable than others. |
How Your Income is Calculated
| Self-Employed Type | How Income is Assessed |
|---|---|
| Sole Trader | Based on net profit (after expenses) shown on SA302 or tax calculation |
| Limited Company Director | Based on salary + dividends (some lenders include retained profits) |
| Contractor | Based on daily or hourly rate multiplied over a year (e.g. 46-48 weeks) |
| Freelancer/Multiple Clients | Treated similarly to sole traders or contractors, depending on setup |
Documents You’ll Need
Be prepared! Lenders require documentation to assess your financial situation.
Typical Documents Needed:
| Document | Details |
|---|---|
| SA302s or Tax Calculations | Usually last 1–3 years from HMRC |
| Tax Year Overviews (TYOs) | To match your SA302s |
| Company Accounts (Ltd Co) | Signed by accountant (last 1–3 years) |
| Accountant’s Reference | Some lenders request a letter from your accountant |
| Business Bank Statements | 3–6 months to verify income and spending |
| Personal Bank Statements | Usually 3 months – to assess affordability |
| ID and Proof of Address | Passport, driving licence, utility bill, etc. |
| Deposit Evidence | Where your deposit is coming from (savings, gift, sale of asset, etc) |
Top Tips to Improve Your Mortgage Chances
Use a Specialist Mortgage Broker – Many lenders only work via brokers.
File Your Taxes Promptly – Outdated tax info can slow down or block applications.
Build a Strong Credit Profile – Register on the electoral roll, pay bills on time.
Save a Larger Deposit – 10–15%+ is ideal for better rates.
Get an Accountant – A qualified accountant can help present your finances clearly.
Avoid Big Business Changes – Try not to change structure (e.g. sole trader → Ltd Co) just before applying.
Case Study: “How I Got a Mortgage With One Year’s Accounts”
Name: Lisa
Job: Freelance graphic designer
Years trading: 1
Challenge: Many lenders said no due to limited history
Solution: Used a broker who found a lender accepting 1 year’s SA302 and 12 months of consistent income. Lisa also had a 20% deposit and good credit.
Outcome: Approved for a 2-year fixed mortgage at a competitive rate.
“I was overwhelmed trying to apply on my own. My broker knew which lender to approach and what documents they’d want. If you’re newly self-employed, don’t give up!”
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FAQ: Self-Employed Mortgage Guide
| Question | Answer |
|---|---|
| 1. Can I get a mortgage if I am self-employed? | Yes, self-employed individuals can get a mortgage. Lenders will review your income stability, trading history, and affordability rather than relying on traditional payslips. Consistent earnings over at least two years help demonstrate reliability. |
| 2. How do lenders assess my income? | Most lenders calculate income using your SA302 forms or tax year overviews from HMRC. They often average your last two years’ net profits or salary plus dividends if you operate as a limited company. |
| 3. What documents do I need for a self-employed mortgage? | You will usually need two years of tax calculations (SA302s), tax year overviews, recent business bank statements, accounts prepared by a qualified accountant, and proof of ID and address. |
| 4. Can I get a mortgage with only one year of accounts? | Some specialist lenders may consider applicants with one year of trading history, especially if you have a strong deposit, good credit record, and evidence of future contracts or ongoing work. |
| 5. Do I need a larger deposit if I am self-employed? | A typical minimum deposit is 10 percent, but having 15–25 percent can increase your chances of approval and access to lower interest rates. The stronger your financial profile, the better your mortgage options. |
| 6. Does my credit score affect my application? | Yes, your credit score plays a vital role. A strong credit history shows lenders that you manage money responsibly. Check and improve your score before applying to maximise approval chances. |
| 7. How much can I borrow as a self-employed applicant? | Lenders usually offer around four to five times your verified annual income. The final amount depends on your affordability assessment, debt commitments, and overall financial stability. |
| 8. Can I apply jointly if my partner is employed? | Yes. Applying with a partner who has a regular salary can strengthen your application. Lenders combine both incomes to calculate borrowing capacity and overall affordability. |
| 9. What if my income fluctuates each year? | Lenders prefer consistent earnings, but they will average your income over the last two years. If your latest year is lower, some lenders may use that figure instead of the higher average. |
| 10. Should I use a mortgage broker for self-employed applications? | Using a mortgage broker can be beneficial. Brokers who specialise in self-employed mortgages know which lenders are flexible and can help you find competitive rates that match your trading history. |