Self Employed Mortgages

Self employed doesn't mean complicated. It just means finding the right lender.

Getting a mortgage when you're self employed is not harder than it is for someone in employment. It just requires the right lender and an adviser who understands how your income works. I deal with self employed clients regularly and know which lenders will look at your application favourably and which ones to avoid.

Whether you're a sole trader, a limited company director, a contractor or a freelancer, there are lenders who want your business. The key is presenting your income correctly and approaching the right ones from the start.

How lenders assess self employed income

This is where most self employed applicants come unstuck, not because their income isn't sufficient, but because different lenders calculate it differently.

  • Sole traders and partnerships: most lenders use your net profit as shown on your SA302 and tax year overview, typically averaged over two years

  • Limited company directors: some lenders use salary plus dividends, others use salary plus share of net profit. This distinction matters enormously if you retain profit in your company

  • Contractors: some lenders will use your day rate multiplied by 46 or 48 weeks rather than your accounts, which can significantly increase what you can borrow

  • One year's accounts: some lenders will consider applicants with just one year's trading history in the right circumstances

Why it matters who you approach

A lender who uses salary plus dividends may offer you significantly less than one who uses salary plus net profit. The difference can be tens of thousands of pounds in borrowing capacity. Getting this wrong at the start costs time, impacts your credit file and can delay a purchase or remortgage significantly.

I know how each lender calculates self employed income and I match your situation to the right lender before we submit anything.

Who I work with

  • Sole traders and partnerships

  • Limited company directors taking salary and dividends

  • Directors retaining profit in their company

  • Contractors and freelancers

  • Newly self employed with one year's trading

  • Self employed applicants with complex or multiple income streams

FAQs

How many years of accounts do I need?
Most lenders ask for two years but some will consider one year in the right circumstances. If you've recently gone self employed it's worth having a conversation early rather than assuming you won't qualify. The answer varies significantly by lender.

Which figure do lenders use for limited company directors?
It depends on the lender. Some use salary plus dividends paid, others use salary plus your share of net profit before tax. If you retain significant profit in your company rather than paying it out as dividends, the second approach can make a substantial difference to how much you can borrow. I'll identify which lenders use which method and recommend accordingly.

Can I use a day rate rather than my accounts?
If you work on a contract basis, some lenders will assess your income using your daily or hourly rate rather than your accounts. This is particularly useful if your accountant has legitimately reduced your taxable profit, as your accounts may understate your actual earning capacity. Not all lenders offer this but the ones that do can lend considerably more.

What if my income has gone up significantly in the last year?
Most lenders average your last two years income, which can work against you if you've had strong recent growth. Some lenders will use the most recent year only in the right circumstances. I'll identify whether that option is available to you and whether it genuinely helps before we commit to an approach.

What if my income has dropped in the last year?
This is common and not necessarily a problem. Some lenders will use the lower of the two years, others average them. A small number will look at the picture more holistically. I'll be honest with you about what's achievable and which lenders are likely to be most accommodating.

Do I need to have been self employed for a minimum period?
Most lenders want two years of self employment history but some will consider one year and a small number of specialist lenders will look at even shorter trading histories in the right circumstances. If you're newly self employed it's worth exploring your options sooner rather than later.

Will gaps in my employment history before going self employed be a problem?
Not usually. Lenders are primarily interested in your current income and its sustainability. A gap before you started your business is unlikely to be a significant issue for most lenders.

Can I get a holiday let mortgage if I'm self employed?
Yes, and this is one of the most common combinations I deal with. The rental income assessment for the holiday let runs separately to your personal income assessment, so even if your earned income is complex, the property's projected rental income still carries weight in its own right. See my Holiday Let page for more detail.

What documents will I need?
Typically your SA302s and tax year overviews for the last two years, your latest accounts if you're a limited company director, and three to six months bank statements. Some lenders ask for more, some less. I'll tell you exactly what's needed for the specific lender I'm recommending before we start.

I retain a lot of profit in my company. Does that count towards my mortgage?
It depends entirely on the lender. Some will consider retained profit as part of their assessment, others won't. This is an area where lender selection makes a very significant difference and where getting the right advice really pays off.

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