Mortgages for the self-employed

Improve your chances of a successful mortgage application

Getting a mortgage when self-employed may seem like a daunting task but it doesn't need to be. Generally you can apply for the same mortgages as everyone else but you may have to do more in order to prove your income. All lenders will require proof of income in order to know that you can afford to meet your repayments. Although it can seem difficult, getting a self-employed mortgage is simply a matter of having everything in place to make your application.

Providing proof of income

The mortgage lender will need to see proof of your income. For someone who is self employed this will usually mean:

• providing at least 2 years’ financial accounts
• showing that you have regular work
• putting down a reasonable deposit (our guide to saving for a deposit may be useful)
• showing a good credit history
• having a registered accountant

All lenders have different criteria and assess each application individually. If you’ve been refused a mortgage in the past you might still be accepted by a different lender, don’t give up hope.

Your accountant can help

If you already use an accountant for your business, it's likely that they will be able to help you establish proof of your income and will ensure that your accounts are appropriate for the lender's needs. Having as much evidence of your income as possible is helpful. The accountant may be able to provide:

• payslips
• tax returns
• your business accounts
• end of year tax statements (P60)
• pension statements

Types of business

It's likely that different rules will apply to your application depending on the type of business you're involved in. Showing that your business is strong and it’s income is increasing can also work to your advantage.

Self-employed / Sole trader

Along with 2 years of financial accounts you may be able to provide your lender with evidence of your income via a form from HMRC called SA302, which shows your income and tax paid. Some lenders may requires to see these for the past 3 tax years.

Partnership

Along with your audited accounts and evidence of your personal income, the lender may wish to see evidence of how much of the company you own and what share of the profits is yours.

Limited Company

We require an accountant's letter confirming your shareholding and any remuneration paid to you in the last three years. The amount you can apply to borrow will be dependent on your income, so you should ensure that all payments to you are included.

Helping yourself

Lenders require this evidence to make sure that you will be able to afford the repayments due on your mortgage. The key is making sure that you're able to prove that you can. Some things that can help you do this are:

• ensuring your accounts are up to date
• having a strong credit score
• working with a good accountant
• holding as large a deposit as possible
• it may help if you have an existing relationship with the lender, for example banking with them or having held a mortgage with them in the past

Be realistic about the amount you wish to borrow, neither you nor the lender want you to take on a mortgage you can’t afford. The more advice you take from professionals in advance of your application, the easier it will be to prove your income to the lender.

Organisation is key

It may seem a lot more difficult to get a mortgage when you're self-employed. Although they may require more information from you the lender wants to know the same thing that they want to know about employed people, that you can afford to repay the mortgage without getting in to financial difficulty. If you are organised and provide the required information to support that you can afford the repayments, getting the mortgage for your next home needn't be difficult.