Self-Employed Mortgage

Is it hard to get a mortgage if you are self-employed?

It’s not harder, it’s just different. For the employed, lenders probably want payslips, and often no more than three months’ worth. With the self-employed, lenders usually want a longer track record. There’s also different documentation involved because there are more things to account for.

A lot of the process is the same, though, but it does depend on what kind of lender we’re going with. Some want to see a bit more stability and a longer track record for the self-employed – a minimum of one year, and potentially two or even three. It can feel a bit harsh, but that’s the way lenders look at it.

It’s always good for self-employed people to get their ducks in a row as early as possible. It helps to know where you stand – and perhaps sooner than an employed person would look at things.

What type of mortgage can I get if I’m self-employed?

The product range is exactly the same as for the employed. The only limitation is if you only have one year’s accounts compared to the industry standard of two.

Affordability might be slightly different from lender to lender because some will take salary plus dividends, and others will take salary plus net profit. But essentially, whatever an employed person can get, a self-employed person should usually be able to get as well.

Can I get a 95% mortgage if I’m self-employed?

Yes – as I say, there’s no discrimination against self-employed people. The same rules apply. For a lot of lenders, 95% is the maximum amount they will lend on a property. That relies on having quite a good credit history and meeting affordability rules.

As long as those two things are met, 95% is open to self-employed people just the same as for the employed.

How many years do you need to be self-employed to get a mortgage?

The industry standard is two or maybe three years. The history you need will be in the form of accounts, tax year overviews and tax year calculations. Some lenders will accept just one year’s records – it’s a little more niche, but it’s possible.

A lot of clients go from being a sole trader to a limited company, and then only have one year’s limited company accounts. In that case a mortgage is definitely possible. It relies on the context and whether you’ve been in the same field. It’s definitely worth a chat if you’re in that situation.

Can I get a mortgage with only one year of self-employment?

Yes. One year of self-employment, whether that be as a sole trader, limited company or partnership, is definitely possible.

It would probably involve a slightly more specialist lender and may require more context or having a strong financial profile and good credit, but it’s feasible.

If you don’t meet that minimum of two years it’s still worth having a chat. Clients often say they’ve only got one year’s limited company accounts and are worried that would limit them. But we have managed to get deals like that across the line, so why not explore the options?

What if my most recent year’s income is lower than a previous year or previous years?

If you’ve got a two-year track record, or maybe three years, a lot of lenders will average it over that period.

It might be salary and dividends or salary and net profit. So if you earned £10,000 in the previous year and £20,000 last year, that’ll obviously be a £15,000 average.

If it’s the other way around, where you went from £20,000 down to £10,000 this year, most lenders won’t average. They’ll just take the latest year’s figures – and with these being lower, there might be a story behind that.

As we know, the economy can make things harder, and certain years are better or worse than others. It may be that you’ve simply invested more into the company, so it looks like you’ve made less profit, or it may be that times have been slightly tougher. It’s not impossible to get a mortgage in that situation – we’ll probably just work off the latest year’s figures.

How much can I borrow as a self-employed person?

Typically you’ll get around 4.5 to five times your income, depending on the amount you earn and whether you’re a First Time Buyer, a home mover or this is a remortgage.

It’s much the same as the employed. There are just a few variations around how lenders work it out. The main difference is that consistency and quality of income is a lot more important. For employed people, lenders just assume everything will stay the same month after month.

What deposit do I need if I’m self-employed?

Again, it’s the same as for the employed, where 5% is the general minimum. There are some deals currently where you can get away with less deposit, but that’s the industry standard – UK mortgages: 100% loans are back – will they work for you? | The Guardian [information correct at the time of recording in July 2025].

The more you put down – so the less you borrow compared to the house value – the lower your Loan to Value, which gives you a better rate.

Can I use my self-employment grant as a deposit?

It will vary from lender to lender. It’s worth having that chat to understand what lenders will or won’t accept. This is viewed as income support as opposed to savings, essentially.

It may have an impact on the company as a whole – it depends how it’s treated in your accounts. Obviously a lot of self-employed people have accountants, so it may be worth me having a chat with them to understand how it’s been accounted for.

What are self-certification mortgages and do they still exist?

No, they don’t exist anymore. There are a few brokers in our office that remember the days of self-certification or self-cert mortgages.

With these mortgages, people would basically state how much they earned and a broker would sign it off without any proof of income.

For historic reasons, banks tightening up and scrutiny from the Financial Conduct Authority, these don’t exist anymore. We now always need documentation to prove affordability.

If someone says they can do this, they’re not a reputable provider – it’s likely to be a back-alley dealer.

How will I be assessed as a self-employed applicant?

If you’re self-employed, the lender will be interested in the stability of the business, whether there’s a continuation of profit or a decline. The rationale behind it will confirm the income they will take.

Some lenders will take salary and dividends and some take salary and profits. We’ll explore that in line with how much we’re looking to borrow and comparing that to rates. That’s how we come up with a plan.

Depending on the lender, they may look into what’s being spent – and what’s not. They do look into things a little bit more than for an employed person, but don’t feel that you’re going to be interrogated. It’s not as intense as people might think.

Will IR35 affect my mortgage application?

It can, especially if you work through a limited company or there’s an umbrella structure. Again, it’s worth a conversation.

Lenders may treat you as an employee or a contractor, depending on your IR35 status. It’s important to look at how it could impact you.

How will a lender calculate my self-employed mortgage earnings?

If you’re a sole trader, you don’t work in salary and dividends, you work in net profit. Lenders usually take an average of the last two to three years, depending on the history you’ve got. They’ll use that as your income for affordability.

For limited company directors, sometimes it’s salary and dividends, and sometimes net profit and salary. It depends on the lender and their affordability criteria.

How do I prove my income? What documents are needed?

It depends on the lender’s appetite. Some will just rely on your SA302s or tax calculations and tax year overviews.

Usually it’s the last two years, or potentially just one, or three. They may want to see your accounts over the same period, and potentially business bank statements for more up-to-date income and expenditure.

They may potentially want an accountant’s reference to confirm that current business is sustainable.

I’ll be honest – a lot of the high street lenders won’t want more than two years SA302s and tax year overviews. Slightly more niche lenders may want more documents. It shouldn’t be anything too hard to provide. If you want to know more about what you need and what your mortgage options might be, get in touch.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.