Mortgages for the self employed

It is possible to get a mortgage if you are self-employed, but there are some boxes you need to tick first. Here’s what you need to know about self-employed mortgages.

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Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

Can I get a mortgage if I am self-employed?

Yes, you can, but there are stricter mortgage lending requirements if you work for yourself. This is because lenders see you as riskier; largely because your income is expected to fluctuate. However it is possible to get a self-employed mortgage, we show you how.

Are you self-employed?

You will be classed as self-employed if you own around about 25% of a business, or more. 

Those who are in a partnership are treated the same as those who are sole traders.

Is it difficult to get a mortgage if I’m self-employed?

You have to prove how much you earn when you apply for a mortgage, because lenders will want to make sure you can afford the monthly payments.

Proving your income is sometimes more difficult if you're self-employed, but you should be able to do this if you can get the right paperwork together.

Where can I find a self-employed mortgage?

Most lenders offer mortgages to self-employed people, but you may also want to consider a specialist lender.

You can find one using our self-employed mortgages comparison, which includes each deal's interest rate, fees and LTV (this lets you work out the deposit you need).

Can you still get a self-certification mortgage?

No, the Financial Conduct Authority (FCA) banned self-certification mortgages in 2011. This stopped self-employed people applying for mortgages where they did not have to prove their income.

Find out  about self-certification mortgages

Which lenders offer self-employed people mortgages?

Most lenders are happy to give mortgages for self-employed people if:

  • You have been trading for at least three years

  • You have two years of accounts or self-assessment tax returns available

You may also be able to find a lender who would consider your self-employed mortgage application if you have one year of accounts plus a projection, but these are in the minority.

Some stricter lenders may want to see a prediction of your future clients or contracts, to make sure you can afford your mortgage repayments.

Do I need a deposit to get a self-employed mortgage?

There may be some discretion around the deposit that's required depending on how much information you can give the lender.

Can I get a self-employed mortgage with a poor credit rating?

If you have a poor credit rating, there may also be some discretion. It may be you have to take out a mortgage with a higher rate of interest for the first few years of the mortgage. After you have paid off some of the loan then you may be able to get a better deal.

Shop around and compare self-employed mortgage deals to find the right product for you. 

Speaking to a mortgage broker can also help you find the right deal, and meet the requirements for a successful application before you apply.

How is a self-employed mortgage calculated?

The amount you can borrow and the way it's calculated depends on the lender, which is why it is important to shop around for the best deal.

Some lenders set the amount you can borrow based on your previous few years' income, whereas others calculate it based on only your previous year of trading.

They will also calculate your mortgage offer differently, depending on your legal status:

  • For sole traders and partnerships, lenders take net profits as income

  • For limited companies, the lenders look at salary and dividends. In some cases, they look at salary and net profit of the company

Working out how much to lend on a self-employed mortgage

This is where being self-employed can make it tricky to work out how much you can borrow.

When lenders decide how much you can borrow, they often find it difficult to work out your regular income. 

For example, you might have quiet months or years, or periods when your business does better. This can affect the amount of money that a lender would offer you.

How to apply for a self-employed mortgage

Can you get the same offers as people who are employed?

Yes, you should be able to access all the same offers as people on a regular salary. The requirements will be different though and be prepared to go through a few more hoops to get your self-employed mortgage.

Look at all your options, and make sure you have the evidence you need to prove that you are able to repay the loan. You're more likely to get a mortgage if you have:

  • A healthy deposit

  • A good credit rating

  • Enough income to cover your mortgage repayments

Improve your chances of getting accepted

Get help finding and applying for the right mortgage from an expert broker

  • Always keep your business paperwork, accounts and electronic records up to date

  • Use an accountant if you need help organising your accounts and taxes

  • Complete a self-assessment SA302 form to prove your income

How long you have been trading is important, so you'll have a better chance if you can wait until your business has existed for a couple of years before you apply.

If you're a first time buyer or looking to move house or remortgage, we can help you find the best mortgage deal to suit your needs.