“Can I Get a Mortgage if I’m Self-employed?”
Let’s start with this.
Broadly speaking, there is no such thing as a self-employed mortgage.
If you’re self-employed, you don’t necessarily need a special mortgage product and being self-employed doesn’t automatically mean you’ll pay more. But lenders absolutely do have different policies – and different appetites – when it comes to those of us who are self-employed.
So, the question to ask is:
Here’s the useful stuff.
Why does being self-employed make a difference?
A bit of history helps.
Before the financial crisis of 2007-2008, the mortgage market was a very different place.
Consider this: self-certified mortgages (which were often used by self-employed customers). These allowed borrowers to state their own income without providing documents for the lender to independently verify it.
What?! Yes, really.
Lender: “How much do you earn?”
Customer: “£75,000.”
Lender: “OK.”
That’s obviously a simplification, but the important bit is that following the financial crisis, that changed. And rightly so.
The Mortgage Market Review introduced much tighter responsible-lending rules, which came into effect in 2014. Lenders now have to verify the income that is being used when assessing whether the mortgage is affordable.
That’s true whether you’re employed or self-employed. What’s interesting is how lenders differ in terms of what income they’re prepared to use when you’re self-employed and what evidence they’ll accept.
What counts as self-employed for a mortgage?
It’s likely that a lender will class you as self-employed if you’re any of the following:
- Sole trader
- Limited company director
- Member of a partnership or LLP
- Contractor
- Freelancer
However, it’s not as simple as ticking a box marked self-employed on your mortgage application. Lenders will want to understand how your business is structured and how you actually receive your income.
How do lenders assess a sole trader’s income?
If you’re a sole trader, your turnover isn’t normally the figure that a lender is interested in.
You may invoice £100,000, but that doesn’t mean your income for mortgage purposes is £100,000.
When you deduct the costs of running your business, you’re left with your net profit – and it’s generally this figure that lenders will use when assessing your income.
Straightforward enough.
Except different lenders can then treat that net profit figure differently.
One may take an average over the latest two years. Another may use the lower of that average or the figure from the latest year. If profits have increased or fallen, greater weight may be placed on the most recent figure.
How do lenders assess a limited company director’s income?
Many owner-directors don’t take everything their business makes as personal income.
Instead, they may pay themselves a salary as an employee of their business, draw additional income as dividends and leave some of the profit in the company.
Many lenders will default to using what the owner-director draws personally as a salary and dividends. But others may be prepared to consider the underlying profitability of the company.
That distinction can make a significant difference.
Imagine a successful business owner who deliberately retains money within the company.
A lender looking only at salary and dividends may assess a relatively modest income. Another lender, prepared to consider company profit, may take a totally different view of exactly the same business.
Neither lender necessarily has it wrong. They just have different policies and appetites.
How many years’ accounts do I need?
You may have heard that you’ll have no chance until you’ve been self-employed for at least two, or even three years?
Not quite right.
Two years is a common requirement, but it isn’t a universal rule.
Depending on your circumstances, some lenders can consider an application after one full year of self-employment. Some may even take an accountant’s projection into consideration for the current year.
Details matter:
What were you doing before becoming self-employed? Have you moved into self-employment within the same profession? Is the business profitable? Is the income sustainable?
So having one year’s accounts may mean that the number of suitable lenders is smaller, but it doesn’t automatically mean you can’t get a mortgage.
What if my profits have increased – or fallen?
Businesses rarely make exactly the same profit every year.
Maybe yours has grown quickly. Perhaps you’ve invested heavily in the business. You may have had an unusually strong year – or a difficult one.
Context matters. Lenders know this – what differs is what they do with the information.
A fall in profit because a business is in long-term decline is different from a temporary reduction caused by a significant one-off investment.
Likewise, a sharp rise in profit may be encouraging, but a lender won’t necessarily use the latest higher figure in full just because it’s the newest number available.
What documents will I need?
There isn’t one universal list, but depending on your circumstances a lender will likely ask for a combination of:
- Finalised accounts
- HMRC tax calculations – often referred to as SA302s – and associated Tax Year Overviews
- Personal bank statements
- Business bank statements
- Information or confirmation from your accountant
If you’ve only been self-employed for a relatively short period, or there’s something unusual about the figures, the lender may ask for additional information.
That can feel more involved than sending a few payslips. But the purpose is straightforward: the lender needs to establish what you’ve earned and whether that income appears sustainable.
How ‘recent’ do my income documents need to be?
Many lenders will expect your ‘most recent’ income documents to be no older than 18 months old.
For example, an SA302 for the 2025 / 2026 tax year would be accepted as the most recent year up to around October 2027.
Though there are some lenders that are more flexible on this front.
So, does being self-employed count against me?
Short answer? No, not in itself.
Being self-employed doesn’t automatically mean:
- You need a specialist mortgage
- You’ll pay a higher interest rate
- You’ll need three years’ accounts
- You can borrow less
- Or that getting a mortgage will be particularly difficult
You still need to meet the lender’s affordability, credit and wider criteria, just as an employed applicant does. But the main take-away from everything above is:
Often the challenge isn’t that somebody doesn’t earn enough. It’s that the lender they’re looking at doesn’t assess their income in the most appropriate way for their circumstances.
A sole trader with increasing profits may suit one lender better than another.
A limited company director retaining profits within a healthy business may find that a salary-and-dividend-only calculation doesn’t reflect the full picture.
Someone with one year’s accounts may have been told that “lenders require two”.
Why can whole-of-market mortgage advice make a difference?
This is a great example of how knowledgeable, whole-of-market advice can make a real difference.
Two lenders can look at the same person, the same documents and the same business – and arrive at very different conclusions.
They could have different definitions of who they regard as self-employed, require different trading histories, or take different approaches when profits are rising, falling or being retained within a limited company.
My job is to understand you and your business.
How is the business structured? How long have you been trading? How have the figures changed? How do you take your income? Is there anything in the accounts that needs explaining? What are you actually trying to achieve?
When we’ve got that nailed, I can find the most cost-effective and suitable solution across the whole of the market. And sometimes the difference between one lender and another can mean buying or not buying that house – or saving thousands of pounds.
Can you get a mortgage if you’re self-employed?
Absolutely.
And that’s something we can help with.
If you’re self-employed and thinking about buying a property, moving home or reviewing your existing mortgage, talk with us.
Your home may be repossessed if you do not keep up repayments on your mortgage.
A fee may be charged for mortgage advice. The exact amount will depend on your circumstance.