Self-employed mortgages: a complete guide

General guidance, not a personal recommendation. Lender criteria, insurance terms and costs depend on the product and your circumstances. Numerical examples are illustrations unless expressly identified as an individual quote. Check current terms with your adviser and tax or legal points with the relevant specialist.

Self-employment does not automatically prevent a mortgage. The income a lender accepts and the evidence it needs depend on the business structure, trading history and current criteria. Review the accounts and tax records with an adviser before assuming a particular income multiple or number of years will qualify.

What does still matter: choosing the right lender for your specific income structure. Sole trader, director-shareholder, contractor, LLP partner, these are treated very differently by different lenders, and the wrong choice can mean half the borrowing of the right choice.

Know which bucket you're in

Sole trader / unincorporated

Lenders look at net profit from self-assessment (SA302 / tax calculation plus tax year overview). Usually average of last 2 years, or latest year if declining. Simple to evidence but net profit can undersell earnings if you invest heavily in the business.

Limited company director

Two main approaches: (1) salary + dividends taken, (2) salary + director's share of retained company profit. The second approach, which a minority of the lenders on our panel will consider, often allows significantly more borrowing because it reflects the actual company performance not just the money drawn.

Contractor (day-rate)

Some lenders have contractor-specific income methods based on the contract, working pattern and other evidence. The accepted figure and borrowing limit depend on their current rules and the full affordability assessment; it is not a guaranteed multiple of an accounts-based result.

LLP partner

Evidenced via SA302 of your personal drawings plus LLP accounts. Usually 2 years evidence. Some lenders will treat this as if you were a director of a limited company (taking more account of retained profit), most take only the drawings.

Multiple income sources

Dual income, salary plus self-employment, two self-employments, etc. Most lenders will add both, a few will ignore the smaller. Worth shopping around when your structure is mixed.

Very recent self-employment

Minimum 1 year's trading accounts is the typical floor. Under 1 year, very difficult but not impossible with strong employed history in the same field (e.g. recently gone contractor). Specialist lenders exist for this.

The evidence you'll need

Typical self-employed evidence pack:

• Last 2 years SA302s (tax calculations) plus tax year overviews, HMRC documents you can download from your personal tax account.
• Last 2 years company accounts if a limited company. Finalised, signed, ideally by an accountant.
• Accountant's letter / certificate if the lender asks, not all do.
• Last 3 months business bank statements, to verify current trading.
• Last 3 months personal bank statements, drawings, dividends and general financial conduct.
• ID and proof of address. Standard.
• Projection for current year if latest accounts are more than 6 months old.

Some lenders require accounts filed and signed by a qualified accountant (ACA/ACCA/CIMA); others accept accountant-prepared figures in specific formats. We'll tell you exactly what's needed before you gather anything.