Self-employed mortgages
Being your own boss comes with plenty of freedom - and with the right steps, a mortgage too. Here's how you can make it happen.
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Buying a home when you're self-employed
If you're self-employed and thinking about buying a home, you might think getting a mortgage is an ordeal. And yes, it's often a little more complicated - but not impossible. You just need to be prepared, know what mortgage lenders are looking for, and have the right paperwork ready to go.
The main thing lenders want is proof of income. If you're employed, they simply check your payslips. But when you're self-employed, things are a little more complex. Most lenders will ask you to:
- Show at least two years of accounts or tax returns
- Provide evidence of regular income
- Have a good credit report
- Share details about your business, including how stable it is
For example:
Let's say you're a freelance graphic designer and you've been working steadily for the past few years, earning a fairly consistent income. You're in a fairly strong position. Lenders will want to see your tax calculations and possibly your bank statements to back it all up.
If you only have one year of accounts, some lenders will still consider you - especially if you've moved from employment in the same industry or your business is growing steadily. But you may have fewer mortgage deals to choose from.
Tip: Using a specialist mortgage broker can really help when applying for a mortgage, as they'll know which lenders are most flexible with self-employed applicants.
How much you can borrow
What you can borrow depends on how much you earn - as with any mortgage - but different forms of self-employment change how that income is assessed.
Here's how lenders typically work with self-employed borrowers:
Sole traders and partnerships
Lenders might look at your net profit over the last two or three years, which you can typically show through self-assessment tax returns.
Limited company directors
Lenders usually look at your salary plus dividend payments. Some will also consider retained profits if you don't draw everything from the business.
Contractors
Some lenders will calculate income based on your day rate - e.g. £400/day over a set number of weeks in a year. Some lenders will base your borrowing potential on that, rather than your most recent tax return, which could be lower if you offset expenses.
Tip: However your income is structured, it's helpful to have your accounts certified by a registered accountant. Evidence of any upcoming contracts will also be useful in proving your future earnings.
How to boost your chances of approval
The good news is there's plenty you can do to make your mortgage application more appealing to lenders:
Get your accounts in order
Make sure you have up to date, accurate, and ideally certified accounts. Lenders like to see consistency and professionalism.
Improve your credit score
Pay off debts, register on the electoral roll, and avoid taking out new credit in the months before you apply.
Save a larger deposit
The more you can put down, the less risky you seem to lenders. A good deposit may also open up better interest rates.
Use a mortgage broker
If you can find a broker who's experienced with self-employed applicants, all the better. They'll know which lenders are likely to accept you and can help with all the mortgage agreement itself.
Summing up
Getting a mortgage when you're self-employed might take a little more effort, but it's more than possible with the right preparation. Lenders simply want to be confident you can afford the repayments. If you have solid accounts, a deposit saved, and maybe the support of a good broker, you're well on your way to owning your home.
Frequently Asked Questions
Can I get a mortgage if I've only been self-employed for a year?
Yes, some lenders will consider you with just one year of accounts, especially if you've moved from a similar employed role. But you may need a larger deposit or more evidence of future income to be approved. It's always helpful to speak to a broker early, as they'll know which lenders are open to newer self-employed applicants.
What documents will I need to apply?
Typically, you'll need two to three years of SA302 tax returns, your HMRC tax year overviews, business accounts (if applicable), personal and business bank statements, and ID. An accountant's reference may also help. Having everything organised and ready to go can speed up the process and improve your chances of approval.
Do I need to use a specialist lender?
Not always. Some high street banks are self-employed-friendly. But a specialist lender may offer more flexible criteria, especially if your income is complicated or you've had some ups and downs. It's worth comparing both types to see where you'll get the best deal based on your situation.
Will I have to pay a higher interest rate?
Not necessarily. If you have a good credit score, a steady income, and a sizeable deposit, you can access the same competitive rates as employed applicants. The key is how well you can prove your affordability. Shopping around and checking your accounts regularly for stability should mean you don't overpay just because you're self-employed.
Can I get a mortgage if my income changes month to month?
Yes - lenders understand that self-employed income can be an up-and-down affair. They'll often average your income over two or three years to get a realistic picture. Just be ready to explain any large spikes or troughs. Consistency often matters more than perfection, so showing a stable overall trend can really help.
Will lenders look at my business expenses?
They might. If you're a sole trader, your net profit (after expenses) can be an important factor. For limited company owners, the focus is usually on your salary and dividends - but some lenders will look at retained profits too, especially if you don't withdraw all your income. Being smart about how your income is structured could make a big difference in how much you can borrow.
About the author
Lawrence Howlett
Lawrence Howlett brings a results-driven mindset to his writing, shaped by over a decade of experience across finance, legal, and energy sectors. As the founder of Moneysavingadvisors, he’s built a reputation for turning complex financial concepts into clear, actionable insights for consumers. His writing stands out for its clarity, structure, and focus on delivering value.
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