Can I Get a Mortgage If I’m Self-Employed? What Lenders Look For

Being self-employed doesn't mean you can't get a mortgage. However, proving your income can be a little different compared with someone who receives the same salary every month through PAYE.

Whether you're a sole trader, company director, contractor or freelancer, understanding what mortgage lenders are looking for can make the process much easier.

How do mortgage lenders assess self-employed income?

The answer depends partly on how your business is structured.

For sole traders and partners, lenders will commonly look at your share of the business's taxable profits. For limited company directors, the way income is assessed can vary considerably between lenders.

Some may focus primarily on salary and dividends, while others may be able to consider additional elements of the company's financial position, subject to their lending criteria.

This is one of the reasons choosing the right lender can be particularly important when you're self-employed.

How many years of accounts do I need?

Requirements vary between lenders.

Having an established trading history can provide lenders with more information when assessing your application, but having a shorter trading history doesn't necessarily mean that getting a mortgage is impossible.

Your wider circumstances will also be taken into account.

What documents might I need?

Depending on your circumstances and the lender, you may be asked to provide documents such as accounts, tax calculations and tax year overviews, business and personal bank statements, or evidence of ongoing contracts.

It's useful to get your paperwork organised before making an application, as this can help the process run more smoothly.

What if my income changes from year to year?

Fluctuating income is common for self-employed people.

Different lenders have different approaches to assessing this. Some may use an average over a period of time, while others may place more emphasis on the latest year's figures.

If your income has increased or decreased significantly, a lender may also want to understand why.

How can a mortgage broker help?

This is where mortgage advice can be particularly valuable.

Lenders don't all assess self-employed applicants in the same way. A mortgage broker can look at how you earn your income and identify lenders whose criteria may be better suited to your circumstances.

If you're self-employed and considering buying a home or reviewing your existing mortgage, speaking to an adviser early can help you understand your options before you apply.