Self-employed mortgages
Mortgage advice for self-employed people
Being self-employed doesn't stop you getting a mortgage, but lenders look at your income differently. Charlene can explain what evidence you're likely to need and which lenders' approach could suit how you earn.
Advice by Charlene McGuire, mortgage and protection adviser with 25 years' experience, based in North Lanarkshire.
Your home may be repossessed if you do not keep up repayments on your mortgage.
How lenders look at self-employed income
Sole traders are usually assessed on net profit, partners on their share of profit, and limited company directors on salary and dividends, sometimes with retained profit taken into account. Lenders' approaches differ, which is where advice can help.
Documents you're likely to need
- Usually two years of SA302 tax calculations and tax year overviews, or certified accounts.
- Recent business and personal bank statements.
- For contractors, your current contract and history of contracts.
- Proof of deposit, ID and address.
Preparing in advance
If your income has recently risen or fallen, or you've traded for less than two years, talk to Charlene early. Some lenders consider shorter trading histories, and timing your application around your latest accounts can make a difference.
Common questions
How many years of accounts do I need for a mortgage?
Many lenders ask for two years, but some will consider one year's figures depending on your circumstances and history in the same line of work.
Can company directors use retained profit?
Some lenders will consider your share of retained profit as well as salary and dividends. Others won't, so it's worth getting advice on which approach suits you.
Can CIS contractors get a mortgage on day-rate income?
Yes. Some lenders assess Construction Industry Scheme contractors on their annualised day rate rather than accounts, which can allow more borrowing, especially with a history of renewing contracts. Criteria vary between lenders, so it's worth getting advice.
What if my profits have gone up and down?
Lenders differ: some average two years of figures, others use the latest year or ask for an explanation of the change. If your income has fallen recently, applying once your newest accounts are prepared can help. Charlene can match you to lenders whose approach fits.
Ready to talk it through?
Send an enquiry and Charlene will get in touch to understand your plans and explain what the next steps could look like.