Being self-employed does not stop you getting a mortgage. It usually means lenders assess your income differently — and that different lenders may reach different conclusions about the same client’s borrowing capacity.
Is there such a thing as a self-employed mortgage?
Not as a separate product. Self-employed applicants can generally be considered for the same fixed-rate, tracker and variable-rate mortgages as anyone else. What differs is how a lender works out your income and what evidence it asks for.
Lenders usually treat you as self-employed if you own a meaningful share of a business you work in. The exact threshold varies between lenders, and how your business is structured affects which figures they use.
How lenders assess self-employed income
The figures a lender works from depend on how you trade:
- Sole trader: commonly the net profit shown on your tax calculations.
- Company director: often salary plus dividends, although some lenders may consider your share of retained profit.
- Partnership: typically your share of the net profit.
- Contractor: some lenders may work from a day rate rather than filed accounts.
Because these approaches differ, two lenders can arrive at very different income figures from identical accounts. That is one reason advice can be valuable when you are self-employed. An experienced adviser will also know if a lender has flexibility to use alternative evidence to those listed in the categories above.
How much trading history do you need?
Many lenders look for two or three years of accounts or tax calculations, typically SA302 documents. Some may consider applications with a shorter history, depending on the profession, the strength of the accounts, and the wider circumstances. There is no single rule that applies across the market.
What you may be asked for
- Tax calculations (SA302s) and accompanying tax year overview summary documents from HMRC
- Finalised accounts, often prepared or certified by a qualified accountant
- Business and personal bank statements
- Details of any other income
What can affect the assessment
- Income trend: where profits have fallen, a lender may work from the most recent, lower figure rather than an average.
- A recent change of business structure, which can shorten the history a lender may recognise.
- How you draw income from the business, particularly where profit is retained rather than distributed.
- Any other borrowing and regular commitments, as with any application.
None of these automatically prevents a mortgage. They affect which lenders may consider the application and on what terms.
Get Professional Advice
Choosing a mortgage can feel daunting, but you don’t have to do it alone. Speaking with a mortgage advisor can help you understand your options and find a product that fits your budget and long-term plans.
At Morrow, we have expert mortgage advisors who are here to help and find the best solution for you, we work with lenders and providers across the whole market, so we can compare a wide range of products and help you make an informed decision with confidence.
Your home may be repossessed if you do not keep up repayments on your mortgage.
