Ben Smith
Being self-employed doesn’t mean you can’t get a mortgage. However, the application process can look a little different from that of someone earning a regular salary through employment.
Mortgage lenders need to understand your income, financial commitments and ability to afford repayments. Depending on how your business operates, they may assess your tax calculations, business accounts, salary, dividends or company profits.
The good news is that lenders have different criteria, meaning one lender may assess your circumstances differently from another. OnTheLadder helps connect self-employed individuals with mortgage advisers who can discuss their circumstances and explore the options available to them.
When applying for a mortgage, self-employed applicants usually need to demonstrate that their income is sufficient and sustainable. The evidence required depends on how you earn your money and the lender you apply to.
If you’re a sole trader, lenders will often look at your taxable profits. If you operate through a limited company, they may consider your salary and dividends, or your share of the company’s profits. Contractors and freelancers may also have options based on their contracts or day rates, depending on the lender’s criteria.
Many lenders prefer to see two years of accounts or tax records, although some may consider applicants with a shorter trading history. Your deposit, credit history, existing commitments and overall affordability will also play a part in the assessment.
Understanding these requirements before applying can help you focus on suitable options. A mortgage adviser can discuss your circumstances and help you understand what lenders may be looking for.
1. Submit an enquiry: Tell us a little about your circumstances and what you’re looking to achieve.
2. Share your situation: Let us know how you earn your income, how long you’ve been self-employed and what type of mortgage you’re looking for.
3. Get connected with an adviser: Your enquiry is passed to a mortgage adviser who can discuss your circumstances.
4. Explore your options: Discuss potential mortgage options, lender requirements and the documents you may need.
5. Decide your next steps: Take the time to consider your options before deciding whether to proceed with a mortgage application.
You may be able to get a mortgage with just one year of self-employment, although your options could be more limited than those available to someone with a longer trading history.
Many lenders prefer two or more years of accounts or tax records. However, some may consider applicants with only one year’s evidence, depending on their profession, previous employment, income and wider financial circumstances.
For example, if you’ve recently started working for yourself but have several years of experience in the same industry, certain lenders may take that background into account. The decision will depend on the lender’s individual criteria and your overall affordability.
If you haven’t been self-employed for very long, don’t automatically assume you need to wait before exploring your options. Speaking with a mortgage adviser can help you understand whether any lenders may consider your circumstances and what evidence you might need.
Finding the right mortgage can be more complicated when your income doesn’t come from a traditional payslip. Different lenders assess self-employed income in different ways, so understanding their criteria can help you make more informed decisions.
A mortgage adviser can help you understand how your income may be assessed, what documentation you might need and which lenders could be worth considering. They can also discuss how your deposit, credit history and financial commitments may affect your options.
This can be particularly useful if your income fluctuates, you’ve recently become self-employed or you run a limited company and aren’t sure how lenders will view your earnings.
OnTheLadder connects people looking for mortgage help with mortgage advisers. Submit an enquiry to start exploring your options based on your circumstances.
Being self-employed shouldn’t stop you from exploring your mortgage options. Whether you’re a sole trader, company director, contractor or freelancer, understanding how lenders assess your income is a useful first step.
Tell us a little about your circumstances through OnTheLadder and connect with a mortgage adviser who can help you explore potential options. You don’t need to have everything figured out before getting started.
