Self-employed mortgage guide

Can you get a mortgage if you’re self-employed?

Yes. Self-employed people can get a mortgage, and it’s a common misconception that it’s harder. The key is presenting your application well, with a lender whose criteria suit the way you earn. Lenders work out self-employed income in different ways, so the lender you choose can change the income figure used.

Sole traders, limited company directors, contractors, CIS workers and partners are all assessed differently. Our self-employed mortgages page shows how lenders read each type of income, with worked examples and a quick income check.

Here you’ll find answers to the more specific questions, such as getting a mortgage when you’ve just started out, after a drop in profit or when you pay yourself a low salary.

What do we need to know about your self-employed income?

To find a lender whose criteria fit, we need to know how you trade, how long you’ve been trading, your income for each of the last two years and how it’s made up. Once we know how you earn, we can match you with lenders whose method of working out your income suits you.

Every lender has its own criteria for self-employed income, and which lender suits you depends on your circumstances. That full picture tells us which lenders’ criteria suit the way you earn.

Can you get a mortgage if you’ve just become self-employed?

Yes, you can get a mortgage with one year’s accounts, depending on the rest of your circumstances. Lenders look at how long you’ve been trading, whether you’re in the same line of work as before, and the income on your first year’s SA302, along with your tax year overview.

Can you get a mortgage if your profit has dropped?

Yes, a drop in profit doesn’t rule it out. Lenders will look at your income for each year, the reason for any drop, such as illness or a big investment in the business, and how the business is trading now. Each lender has its own way of working out your income when it has gone down from one year to the next.

Telling us about a dip in profit up front, and the reason for it, helps us choose a lender whose criteria fit. Some lenders ask for an explanation or up-to-date figures from your accountant.

Criteria vary from lender to lender, so what suits you depends on your circumstances.

Can you get a mortgage if you’ve moved from sole trader to limited company?

Yes, some lenders will consider your trading history across both structures, along with your income as a sole trader and as a director, and the accounts for each. Lenders treat a change from sole trader to limited company, and the timing of it, in different ways.

We’ll need your SA302s and tax year overviews from your time as a sole trader, plus your company accounts and your salary and dividend figures as a director.

It all depends on the individual lender’s criteria and your circumstances.

Can you get a mortgage if you pay yourself a low salary and dividends?

Yes, plenty of limited company directors pay themselves a low salary plus dividends. Most lenders use your salary plus dividends, while some use your salary plus your share of the company’s net profit. Your shareholding, your company accounts and how the business is trading are all taken into account.

If you leave profit in the company, a lender that uses your share of the net profit may work from a different income figure to one that uses salary and dividends. For a worked example of both methods, see our self-employed mortgages page.

Can you get a mortgage with employed and self-employed income?

Yes. Some lenders will combine a job and a side business, looking at both: your employed income through your payslips and P60, and your self-employed income through your tax calculations and trading history. Criteria for combining a second income with self-employed income differ between lenders.

For this, we’ll need your payslips and P60 for your job, plus your SA302s and tax year overviews showing your self-employed income.

What’s possible depends on the lender and your situation.

Do you need an accountant to get a self-employed mortgage?

No, not always. Many lenders work from your SA302 tax calculations and tax year overviews from HMRC. Accounts prepared by a qualified accountant, or an accountant’s certificate confirming your income, are requested by some lenders, particularly for limited company directors. It depends on the individual lender.

If your accountant prepares your accounts, having them ready, along with your tax calculations, means we can show lenders the full picture as soon as they ask.

Which option suits you depends on your circumstances and the lender’s criteria.

How much can you borrow if you’re self-employed?

Lenders typically lend between 4 and 5.5 times income, and some go up to 6 times. For self-employed people, the key is the income figure each lender uses, which depends on how you trade and the lender’s method. Your credit profile, outgoings and an affordability check all affect the final amount.

Because lenders work out self-employed income differently, the same figures can give different borrowing amounts with different lenders. There’s also a quick check on our self-employed mortgages page showing the income figure each method gives.

Can you get a self-employed mortgage with bad credit?

Yes, self-employed applicants with missed payments, defaults or CCJs can still be considered, depending on their credit profile and each lender’s criteria. Credit history is assessed alongside your self-employed income, so we need the details of both to find a lender that fits.

Our bad credit mortgage guide goes through each type of credit issue in more depth.

Lending decisions depend on each lender’s individual criteria.

What documents do you need for a self-employed mortgage?

Typical documents are your SA302 tax calculations and matching tax year overviews for the last two years, plus photo ID, proof of address and recent bank statements. Limited company directors usually also provide company accounts, contractors a current contract, and CIS workers their CIS statements or payslips. This varies by lender.

How does getting a self-employed mortgage work, step by step?

Getting a self-employed mortgage usually follows six steps: gather your tax calculations and accounts, talk through how you earn with an adviser, compare how each lender would read your income, get a mortgage in principle, make the full application, then receive your mortgage offer.

1. Gather your figuresYour SA302s, tax year overviews and, if you have them, your accounts for the last two years.
2. Talk through how you earnA free call with Harry or Lois about how you trade, your income and what you’re looking to do.
3. Compare how lenders read your incomeWe look at how each lender would work out your income, and which lenders’ criteria fit you.
4. Get a mortgage in principleWhere possible, with a lender that uses a soft search at this stage.
5. Make the full applicationWe submit your application and documents and deal with any questions from the lender.
6. Receive your mortgage offerOnce the lender has checked everything, your mortgage offer is issued.

Self-employed mortgage questions, answered