Getting a mortgage as a self-employed person needn’t be daunting. The vast majority of lenders are happy to consider self-employed applicants nowadays, so long as they can evidence their income and work experience. It’s perfectly possible to get a competitive self-employed mortgage deal with the right advice.
Check out our self-employed mortgage guide for further information.
How much will I be able to borrow?
The income multiple you receive as a self-employed person won’t usually differ due to being self-employed. Typically you can borrow the same as employed people, at between 4 and 5 times your annual income, depending on the lender.
However, the way in which your annual income is determined will depend on the individual lender, and your specific trading type. Most lenders will use an average of the last 2-3 years income, and tend to do so as follows:
-
Sole trader - They will use your Net profits if based on the last 2-3 years accounts or total income received if based on your SA302 tax statement
-
Partnership - They will use the borrowers share of the net business profits if using company accounts or their percentage share of the total income received if using SA302s
-
Limited company director - Either the director’s share of salary and dividends. Some lenders will also look at net profits
Can I get a mortgage in my first year of self-employment?
Securing a mortgage when you have been self-employed for less than 12 months is challenging, but certainly not impossible. However, if you are applying with only one year of history, the lender will base their affordability assessment strictly on the net profit (or salary plus dividends) declarable from those specific 12 months.
This table illustrates how your choice of lenders increases, the longer you’ve been trading.
|
Length of time Self-Employed |
Approximate number of lenders |
Lender type |
|
Less than 1 year |
Fewer than 10 |
Niche, seek a specialist broker |
|
1 year |
20 - 25 |
Restricted to specialist lenders |
|
2 years |
65 - 75 |
Some high street lenders, as well as specialist lenders |
|
3 years+ |
90+ |
Full market access |
Featured Articles
Mortgages For Self-Employed People
A complete guide to mortgages for the self-employed
Getting a Self-Employed Mortgage With 1 Year’s Accounts
How to get a mortgage with 12 months' trading history
Getting a Self-Employed Mortgage With 2 Years’ Accounts
How to get a mortgage with 24 months' trading history
Mortgages for Sole Traders
A mortgage guide for self-employed sole traders
Getting a Mortgage as a Company Director
A guide to mortgages for limited company directors
Getting a Mortgage in a Partnership
How to get a mortgage in a business partnership
Contractor Mortgages
All you need to know about mortgages for contractors
Umbrella Company Mortgages
How to get a mortgage if you trade under an umbrella company
Mortgages for Freelancers
Getting the best mortgage deal as a freelancerMore Articles Related to Self-Employed Mortgages
FAQs
Not necessarily. Many lenders understand that incorporating is a natural step for a growing business. If your line of work remains the same and you hold a majority share in the new company, several lenders will treat your trading history as continuous. You will typically need to provide your previous Sole Trader accounts alongside your new Limited Company records to prove the business is sustainable, but you often won't need to wait for two full years of new company accounts.
Compare self-employed mortgage rates for FREE
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
IF YOU ARE THINKING OF CONSOLIDATING EXISTING BORROWING YOU SHOULD BE AWARE THAT YOU MAY BE EXTENDING THE TERMS OF THE DEBT AND INCREASING THE TOTAL AMOUNT YOU REPAY.
Please choose an option