How do you get a mortgage if you are self-employed?

Getting a mortgage when you are self-employed can be tricky, but it certainly isn’t impossible.

There isn’t such a thing as a “self-employed mortgage” - you will be applying for the same mortgages as anyone else. The main difference is you will be required to provide more evidence of a reliable income.

What will I need to provide for a self-employed mortgage?

You will be required to provide the same documents as anyone else applying for a mortgage, these include:

  • Passport or diving licence
  • Utility bill
  • Bank statements (3-6 months)
  • Evidence of deposit

Proving your income

Different lenders ask for different documents for self-employed applicants, these could include:

  • 2+ years of certified accounts
  • 2 + years Tax Year Overviews and Tax Calculations

Will I need to pay a higher mortgage rate?

If you can provide proof of your income, and a mortgage lender is confident you are able to make the repayments, you should qualify for the same mortgage as anyone else who is in a permanent role.

The interest rate will depend on other things and not your employment status. A larger deposit generally means a lower mortgage rate, as will a good credit score. The better your credit rating, the more mortgage deals you could be eligible for.

How will my mortgage earnings be calculated?

Sole trader
Lenders will generally look at your net profit over the past two to three years and take an average from those figures.

Limited company
Lenders will look at your share of net profit or your salary and dividends, or sometimes both

Contractor
Some lenders will use your daily rate, subject to your contract meeting their criteria

What can you do to improve your chances of getting a mortgage

  • Get together your Tax documents – you may be able to log into HMRC to obtain these – or if you have an accountant, they will have access to them
  • Use an Accountant – using a qualified accountant to prepare your accounts is sometimes a requirement of the lender
  • Boost your credit score – this can help to get the best deal. Check out how you can do that here
  • Save as much as possible – a bigger deposit opens up more mortgage products and cheaper deals

How to find the best mortgage deals for those who are self-employed?

Using a mortgage broker can be a great idea as they have access to more products than you would if you were to go online or through a bank.

The team at Mortgage Required are specialists in self-employed mortgages, and would be happy to help. Give them a call on: 01628 507477, or email: team@mortgagerequired.com.

Recent posts

Deals of week web larger

Here are the lowest fixed mortgage rates of the week, available to first-time buyers, home movers, buy-to-let, and those remortgaging.

Call us for more information: 01628 507477 or email: team@mortgagerequired.com.

Summer Add Value   Web Larger

Different seasons can have a noticeable effect on property prices.

Research from Zoopla shows that spending out on certain features can fetch up to £29,000 during the summer months. 

Starmers Resignation   What Does It Mean For Mortgages   Web Larger

Monday 22nd June saw Keir Starmer resign as Prime Minister and Labour leader. The resignation does not directly impact mortgage rates, as changes were taking place before this announcement. However, it could influence mortgage rates indirectly through financial markets and future government policies.

Homebuying Reform   Web Larger

Homebuying reform to cut homebuying times by around four weeks, and save first-time buyers around £650, says the government.

Estate Agent Questions   Web Larger

Buying your first home is a huge milestone, but it can also be a complex process. There are several factors a first-time buyer should consider before making an offer on a property, including understanding the difference between leasehold and freehold and checking council tax bands.

We’ve detailed some questions you can ask your estate agent to help you make an informed decision.

Sings To Remortgage   Web Larger

Remortgaging means switching to a new mortgage deal. This will either be with your current lender or a new one.

Getting advice and moving to a new deal when the time is right can mean lower monthly mortgage payments, better interest rates, or releasing equity from your property.

Here are some signs it may be time to remortgage.

House Price Decrease   Web Larger

According to Nationwide Building Society’s latest House Price Index, house prices dropped 0.6% month on month in May – the first monthly decline this year.

Most Affordable UK Spots For First Time Buyers   Web Larger

Research from Lloyds identifies the most affordable areas in the UK for first-time buyers to be able to get onto the property ladder.