Self-Employed Mortgage
Self-employed mortgage broker in Birmingham helping sole traders, company directors and contractors prove income and secure mortgages, including with one year's accounts.
Getting a mortgage when you are self-employed can be more complex than a standard employed application. There is no separate "self-employed mortgage" product - you apply for the same mortgages as everyone else - but lenders look more closely at how you prove your income and how stable it is likely to be.
How that income is assessed depends heavily on your business structure. A sole trader, limited company director, contractor, partner or business owner can each be treated very differently, and one lender may decline a case that another would happily consider. At Mortgage Centre, we help self-employed clients understand how lenders are likely to view their income before any application is made.
Who we help
We work with a wide range of self-employed clients, including sole traders, limited company directors, contractors, freelancers, business partners, CIS workers and business owners with retained profits. We also help clients with fluctuating income, those with only one year's accounts, and people whose self-employed income is combined with adverse credit.
Why self-employed mortgage cases can be more complex
Self-employed income is rarely as clean-cut as a monthly payslip, and lenders don't all measure it the same way. Some average your last two or three years of income, while others focus on the latest year. Depending on your business structure, a lender might look at net profit, your share of net profit, salary plus dividends, retained profits, a contractor day rate, or figures prepared by your accountant. Because of these differences, the same income can be read one way by one lender and quite differently by another, which is why matching you to the right lender matters so much.
How many years' accounts do you need?
Most high-street lenders want two or three years of accounts as evidence that your income is sustainable. That isn't an absolute rule, though. Some lenders will consider applicants with just one year's accounts, particularly where there is a good credit history, a healthy deposit and a clear, stable income picture - although the choice of lenders and rates can be more limited. If you were previously employed in the same line of work, that history can sometimes support a newer self-employed application too.
How lenders assess different business types
The way your earnings are calculated depends on how you trade. Sole traders are usually assessed on net profit, often averaged over the past two to three years. Limited company directors may be assessed on salary plus dividends, though some lenders will instead consider salary plus their share of retained profit, which can produce a very different figure. Contractors are sometimes assessed on their day or weekly rate annualised, rather than on accounts, and may need to show upcoming or recent contracts. Partners are generally assessed on their share of the partnership's net profit. Knowing which approach suits your situation is often the difference between a decline and an approval.
Proving your income
Lenders won't simply take your word for what you earn, so the strength of your application rests on clear, consistent evidence. In practice that usually means HMRC SA302 tax calculations with matching tax-year overviews for the last two to three years, certified accounts prepared by a qualified accountant, and three to six months of personal - and sometimes business - bank statements. Company directors may also be asked for evidence of dividends or retained profits, and contractors for copies of their contracts. The key is that every document tells the same story of stable, verifiable income, so filing your latest Self Assessment and accounts early is well worth doing before you apply.
How to improve your chances
There are several practical ways to make yourself a stronger candidate. Getting your accounts and SA302s in order before you apply removes a common cause of delay, and saving a larger deposit opens up more lenders and better rates by lowering your loan-to-value. It also helps to keep your credit profile healthy, check your credit report for errors, and make sure you are on the electoral roll. Above all, because self-employed criteria vary so widely between lenders, speaking to a specialist broker before applying helps you avoid lenders who would decline you and focus on those whose criteria you genuinely fit.
How Mortgage Centre helps
We review your income structure, credit profile, deposit, affordability and property plans before any lender is approached, then identify lenders who are likely to take a suitable view of your self-employed income. This helps reduce the risk of unsuitable applications and avoidable declines, and means your case is presented to each lender in the strongest possible way.
Frequently asked questions
Can I get a mortgage if I am self-employed? Possibly. It depends on your income, trading history, accounts, deposit, credit history and the lender's criteria.
Do I need two years' accounts? Not always. Some lenders may consider one year's accounts, though the options can be more limited.
Do lenders use salary and dividends? Some do. Others may use net profit, share of net profit or other income measures depending on your business structure.
Can I get a mortgage if my latest year's income is higher? Possibly. Some lenders may consider the latest year, while others use an average of the last two or three.
Can I get a self-employed mortgage with bad credit? Possibly. This depends on the credit issue, how recent it is, and your income, deposit and affordability.
Do I need an accountant? Not always, but certified accounts prepared by a qualified accountant can strengthen your application and are required by some lenders.