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Self-employed mortgages
Getting a mortgage if you're self-employed might not be as challenging as you think. It might require a more detailed application and a bit more paperwork, though, so understanding the process is key.
Compare self-employed mortgages
Looking to find out your mortgage options? Tell us about yourself and our broker partner Mojo Mortgages will compare and recommend the most suitable self-employed mortgage options available to you.
Is it harder to get a self-employed mortgage?
No, it won't necessarily be harder to get a self-employed mortgage. Your chances of being accepted shouldn't be affected just because you're self-employed either.
However, you will need to provide more documentation that an employed aplicant as lenders need to verify your income differently. Theyll want to build up a clear picture of your earnings over time so they can be confident that your income is sustainable, and that you can comfortably afford the monthly mortgage replayments.
Make sure you choose a lender that’s able to accommodate your circumstances to maximise your chance of success. For example, some lenders are more flexible with self-employed applicants than others, and the type and length of your self-employment can also be a factor in finding a suitable lender.
Who is classed as being self-employed?
You are regarded as self-employed for the purposes of a mortgage application if you are a:
Freelancer
Contractor
Sole trader
Limited company director (even if HMRC treat you as employed by your own company) whose main income is from a business that they own a share of 20% or more in
Partner whose main income is from a business that they own 25% or more of
How much can you borrow if I'm self-employed?
You can typically borrow around 4.5 times your annual income when you're self-employed, which is the same income multiple offered to salaried employees.
However, the final amount you can borrow may be higher or lower depending on several factors. For example, certain high-earning professionals or high-net-worth individuals may be offered enhanced income multiples whereas those with a history of bad credit may see lenders reduce the amount they're willing to offer.
The key difference isn't usually how much you can borrow, but how lenders calculate the income figure they use for their affordability assessment.
How lenders calculate your income
Lenders usually calculate an average of your earnings over the past two or three years to get a reliable figure.
That said, the way your income is calculated can differ slightly depending on the type of self-employed business activity you carry out and which lender you choose. Some lenders are more conservative, while others may take a more holistic view of your income.
Self-employed mortgages vs standard mortgages
A self-employed mortgage is not an actual mortgage product, so there is no difference.
Self-employed applicants can apply for the vast majority of mortgages that an employed applicant could. There are simply lenders who are more receptive to self-employed applicants than others.
As previously mentioned, some elements of the application process are different, such as the way your income is calculated and how you prove your income. But the mortgage itself will be exactly the same.
What documents do you need for your self-employed mortgage application?
If you’re self-employed and applying for a mortgage, you’ll normally need:
The usual ID and address documentation needed for a mortgage application
Six months to three years worth of bank statements - and business bank statements if you run a limited company
Proof of income - which varies depending on your income type
Depending on the type of self-employment, there are further details below on the documents required.
Sole traders
One to three years of personal accounts certified by a qualified accountant
One to three years of tax calculations (also known as SA302s) or tax year overviews from HMRC
Freelancers and some contractors will also be treated as sole traders.
Directors and partners
One to three years of your personal income from tax calculations or a tax year overview plus any dividends drawn down
Some lenders may also be willing to look at retained profits, in which case you would also need to show your business accounts and tax calculations
Contractors
Proof of your day-rate
Contracts covering at least the past 12 months
Sometimes you will also need to show evidence of future contracts lined up for at least another year
This applies to contractors who aren’t classed as sole traders.
CIS contractors and those working under an umbrella company
Usually your income will be treated as employed income by mortgage lenders, so payslips covering six to 12 months are normally required
How to improve your chances of getting a self-employed mortgage
Use an independent mortgage broker
There’s no single best mortgage lender for self employed mortgages, so a broker who can compare mortgages across a range of different lenders gives you a greater chance of a successful application.
Put down a bigger house deposit
The best self-employed mortgages will be available to applicants with the largest deposit. That's because a bigger deposit reduces the lender's risk and demonstrates your financial stability.
Prepare your documentation
Lenders prefer that accounts are certified by a qualified accountant. So, if you usually self-assess, it could be worth employing an accountant to tidy up your tax records. It’s also a good idea to have more years of accounts than necessary and make sure they are the most recent years, as this will help your income appear more stable.
Improve your credit score
As many lenders view self-employment as more risky, having bad credit as well could make it more difficult to get a mortgage. Be sure to check your credit reports beforehand and do all that you can to get your credit history in good shape.
Find a self-employed mortgage
Our broker partner, Mojo Mortgages, will scour the market to find the most suitable self-employed mortgage lender for you.
Self-employed mortgages FAQs
What if I only have financial records for a shorter period of time?
There are specialist lenders that may be willing to consider your application if you can provide just 12 months of accounts, but this will certainly be easier for those in professional roles, or who can evidence previous experience in their industry prior to becoming self-employed.
Will I pay higher mortgage rates if I'm self-employed?
You shouldn’t pay higher rates than an employed person taking out the same mortgage as you. However, there are certain factors that will mean that you may not get such competitive rates, particularly if you use a more specialist lender:
You’ve not been self-employed for very long
You also have bad credit
Your most recent year’s income has fallen significantly compared to previous years
Can I get a joint mortgage if I’m self-employed?
It’s perfectly possible to take out a joint mortgage with one employed applicant and one self-employed applicant or if both applicants are self-employed.
If one applicant has a long-term stable employed income then this could even go in the self-employed applicant’s favour, as it may reduce some of the risk.
Can I still get a self-certification mortgage?
No, self-certification (or self-cert) mortgages have not been available since 2009. The Financial Conduct Authority (FCA) banned them due to irresponsible lending practices.
Read more
Pick one of our articles below or take a look at all of our mortgage guides.
YOUR HOME/PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
The FCA does not regulate mortgages on commercial or investment buy-to-let properties.
Uswitch makes introductions to Mojo Mortgages to provide mortgage solutions.
Uswitch and Mojo Mortgages are part of the same group of companies. Uswitch Limited is authorised and regulated by the Financial Conduct Authority (FCA) under firm reference number 312850. You can check this on the Financial Services Register by visiting the FCA website.
Uswitch Limited is registered in England and Wales (Company No 03612689) The Cooperage, 5 Copper Row, London SE1 2LH.
Mojo Mortgages is a trading style of Life's Great Limited which is registered in England and Wales (06246376). Mojo are authorised and regulated by the Financial Conduct Authority and are on the Financial Services Register (478215)
Mojo’s registered office is The Cooperage, 5 Copper Row, London, SE1 2LH. To contact Mojo by phone, please call 0333 123 0012.