Self-employed mortgages

Mortgages for self-employed people, contractors and freelancers can be more of a challenge to get, but if your income is good enough, then there is no reason why you shouldn’t have access to the same variety of mortgages as anyone else.

Getting a mortgage when self-employed

Mortgage lenders want to know one thing above all - that you’re likely to pay your monthly repayments on time until your mortgage is paid off. So, if you’re self-employed, they want to see evidence that you’ve got money coming in regularly, and over a reasonable period of time.

  • Sole traders - they’ll want to see the net profit, i.e. your taxable income after expenses. Your accountant usually helps you try to limit the net profit for tax benefits, but if you’re applying for a mortgage, a higher figure may be more helpful.
  • Limited company - if you’re a company director, even if it’s only you in the business, lenders are likely to look at both the salary you take and the dividends.

In most cases, you’ll need to show evidence of past, present and future earnings, so it can help if your accounts are prepared by an accountant.

How do you show proof of income if you are self-employed?

  • Two or three years of company accounts, SA302 tax year calculation or self-assessment tax returns, depending on if you are a limited company or a sole trader.
  • You may also have to show evidence of work you’ve got lined up in the near future to show you’ll be able to keep up repayments.
  • Bank statements to show how often you get income from self-employed work.
  • Proof that you can provide your deposit.
  • As with all mortgages, lenders will want to see regular outgoings and financial commitments you have, such as childcare, gym membership or paying off credit card debt.

Can I get a self-certification mortgage?

It used to be the case that self-employed people could get a self-certification mortgage, which meant they could tell the lender how much they earned without having to back it up with hard evidence. Those days are now over – you will now have to show up-to-date proof of how much you earn when you apply for a mortgage.

How long do you have to be self-employed to get a mortgage?

Most lenders will require you to provide two to three years of accounts. But if you haven’t been self-employed for that long, it is still possible to get a mortgage. It may help if before you were self-employed, you were doing a similar full-time job to what you are now. Be prepared to show the accounts you do have, and to answer some extra questions.

How Experian can help

The mortgage you get will depend on how the lender sees you, so it’s best to shop around and compare different mortgages.

Applying for a mortgage as someone who is self-employed isn’t so different to those who are in full-time employment. Lenders want to see a good deposit, and a balance between how much you earn and how much you spend, so they know you’ll make your monthly repayments.

A good credit score can also help get you in shape for a successful mortgage application. If you run a business, they may also credit check your business too.

You may want to consider signing up to the free Experian account to get your Experian Credit Score. Free. Forever. It gives you an idea of how lenders may view you, based on the information in your Experian Credit Report.

Compare mortgages with Experian