Self-Employed Mortgage

A self-employed mortgage is not usually a separate type of mortgage product.

Self-employed applicants can often access the same mortgage products as employed borrowers. The main difference is how the lender verifies and calculates the income used for affordability.

You may be treated as self-employed if you are:

• A sole trader
• A partner in a business
• A limited company director
• A shareholder in a limited company
• A contractor
• A freelancer
• A consultant
• A subcontractor
• A member of a limited liability partnership
• Running more than one business

The lender will want evidence that your income is genuine, sustainable and sufficient to support the mortgage payments.

Different lenders calculate self-employed income differently. Choosing a lender whose assessment fits your business structure can therefore make a significant difference.

Yes, it may be possible to get a mortgage if you are self-employed.

You will need to meet the lender’s affordability, credit and eligibility requirements in the same way as any other applicant.

The lender will normally assess:

• How long you have been self-employed
• Your business structure
• Your declared income
• Recent business performance
• Whether income is stable or changing
• Existing personal commitments
• Your credit history
• The size of your deposit
• Your regular expenditure
• The property being purchased
• The requested mortgage term

Self-employment does not automatically mean that you will pay a higher mortgage rate.

The rate offered will generally depend on the selected product, deposit, credit profile and overall application rather than self-employed status alone.

Many mortgage lenders prefer applicants to have at least two years of trading history.

However, some lenders may consider an application with only one full year of accounts or tax information. This will depend on your occupation, previous experience, deposit and current business performance.

An application with a shorter trading history may be stronger where:

• You previously worked in the same profession
• You have moved from employment to contracting
• The business has secure ongoing contracts
• Your income is supported by current bank statements
• You have relevant qualifications and experience
• You have a larger deposit
• The business is already profitable
• Your accountant can provide supporting information

Being newly self-employed does not automatically prevent you from applying, but fewer lenders may be available.

Self-employed mortgage criteria differ significantly between lenders.

MortgageKey can review:

• Your business structure
• How long you have traded
• Your accounts
• SA302s and tax year overviews
• Salary and dividends
• Net profit
• Retained company profit
• Shareholding
• Contractor income
• Recent business performance
• Your deposit
• Your credit history
• The amount you want to borrow

We can then search for lenders whose income assessment may be suitable for your circumstances and explain the documents required.

All mortgages are subject to status, affordability, valuation, eligibility and the lender’s criteria.