Can self-employed professionals get a mortgage?

Can self-employed professionals get a mortgage?

As a self-employed individual, no doubt your income looks a little different to those in regular employment. This can often cause challenges when it comes to getting a mortgage with some lenders. However, it’s by no means impossible.

If you are self-employed, many lenders will consider you for a mortgage. These lenders recognise the fluctuating nature of self-employed income and have more flexible lending criteria. Speaking with a mortgage broker is highly recommended, as they may have access to specialist self-employed mortgage deals.

I’ll explore this topic further in this blog article and answer some frequently asked questions.

If you are self-employed and seeking mortgage advice, then get in touch with Goldmanread. As an independent mortgage broker, we can search the market for a competitive deal that best suits your employment type and personal circumstances.

What types of self-employed people can get a mortgage?

A self-employed individual is one who is responsible for paying themselves a salary or income. Most professions have self-employed people who operate via their own business, whether this be a sole trader, partnership or limited company.

Most lenders will consider self-employed applicants the same as an employed applicant, although there may be stricter criteria to qualify. All lenders look for a reliable income as proof of affordability.

How your income is assessed for a self-employed mortgage is usually based on your business structure:

  • Sole trader – Lenders tend to assess your net profit as the basis for affordability.
  • Partnership – For partnerships, lenders consider share of profits, individual tax returns, and certified financial accounts to evaluate your income.
  • Limited company – Limited company directors’ income is evaluated by considering a combination of salary and dividends, examining company accounts, payslips, P60s, tax calculations, and personal creditworthiness.

Is a limited company director considered self-employed?

It’s common for self-employed company directors to assume that if they pay themselves from their limited company, lenders will consider them employed applicants, but this is not always the case. Where the limited company director has a shareholding above 12.5%, they will be classed as self-employed.

It’s also common for some company directors to keep their salary low to reduce their tax liability, which can be a hindrance when being assessed for a mortgage. However, some lenders will consider your share of retained profits, improving your chances of approval.

Read our blog here to see if mortgage lenders will accept dividend income.

Is it hard for a self-employed professional to get a mortgage?

While you may have fewer mortgage options available to you as a self-employed applicant, you should still be able to get a mortgage if you fit the lender’s criteria. A specialist lender will require that you provide proof of your income, e.g. certified accounts, over at least a 2-3 year period.

Can you get a self-employed mortgage with one year of accounts?

A common challenge is when an applicant only has one year’s worth of accounts. Some mortgage providers will consider these circumstances, but they are in the minority, and you may not achieve the most competitive mortgage rate. That’s another good reason to work with a broker on your mortgage application, as they know which lenders to approach for your circumstances.

What do mortgage lenders look at when assessing you for a self-employed mortgage?

For any mortgage, a lender will require a good track record of income. This is easy to prove for an employed person with payslips, P60s, etc. Self-employed professionals must provide more proof to satisfy the lender that they have a stable income.

While criteria differs per lender, here is what most lenders will look at when assessing you for a self-employed mortgage:

  • Proof of income – Self-employed mortgage lenders will look at your average income based on 2-3 years of certified accounts and tax returns.
  • Business stability – They may assess the duration and stability of your self-employed business. A longer track record may be viewed more favourably.
  • Credit history – A lender will always check your credit file despite your employment status. A good credit score will undoubtedly help your application.
  • Deposit and loan-to-value ratio – Your deposit and the LTV ratio will impact how much you can borrow and what mortgage terms you are offered. A larger deposit may improve your success in being approved for a self-employed mortgage.

Ways to improve your mortgage application as a self-employed professional

There are various ways to improve your chances of being approved for a self-employed mortgage.

1. Gather proof of income

Make sure you have proof of your self-employed income – either your last three years’ SA302s and the corresponding tax year overview if you are a sole trader or partner. As a limited company director, you should have your last three years certified accounts. It is also useful to have the SA302s plus tax year overview and, in certain circumstances, an accountant’s reference.

2. Check your credit rating

Always check your credit file before applying for a mortgage. It’s important to be aware of your credit score, as any blips or mistakes might affect your mortgage application.

A decent credit score will make the process of getting a mortgage easier and generally means you will not pay higher mortgage rates.

Try to repay credit cards, small loans, etc, which may have a negative impact on your mortgage chances.

3. Gather other essential documents

You will be required to provide proof of ID and address, such as a passport and utility bill. Being on the electoral roll will also help when applying for a mortgage.

Gather your building society and bank statements well in advance to avoid unnecessary hold-ups in the application process.

Also, make sure you have proof of your deposit.

4. Work with a specialist mortgage broker

Mortgage brokers have industry knowledge and experience. They can guide you towards a mortgage lender with favourable lending criteria for the self-employed.

An independent mortgage broker, like Goldmanread, has access to a wide range of lenders and can help you find the best mortgage deals available for your circumstances. We work hard to ensure our clients get competitive mortgage rates regardless of their employment status.

As well as providing advice on how much you could borrow, we will manage the entire mortgage application process to save you time and ensure it goes smoothly.

Get in touch with Goldmanread, specialists in self-employed mortgages

At Goldmanread, we don’t think you should be penalised by mortgage lenders for being your own boss. We have lots of experience in helping self-employed borrowers fulfil their homeownership goals. We know which mortgage providers to approach for your circumstances and are not tied to any particular lenders.

We aim to make the mortgage application process more straightforward, by guiding you through your options and overseeing the application until completion.

Contact us today to get started.

Clive Read
Clive Read

Clive Read is an appointed representative of PRIMIS Mortgage Network. PRIMIS Mortgage Network is a trading style of Personal Touch Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority.

Contact Goldmanread
Contact Us
Please complete our website contact form for a call or message back. We will soon get back to you to offer our friendly advice.
More Posts
leeds building society to restrict lending on holiday lets

Leeds Building Society to restrict lending on Holiday Lets

Leeds Building Society has just announced a suspension of lending on Holiday Let properties in certain locations throughout the UK. Specifically, they have stopped lending in North Norfolk and parts of North Yorkshire. The lending suspension will run for a trial 12-month period. Why has the Leeds Building Society restricted lending on holiday let properties?

Couple doing a mortgage buyout

Can you buy someone out of their house?

Life can be unpredictable, and a joint mortgage is not always sustainable. As a mortgage broker, I’m often approached by clients looking to buy a co-owner out of their house or vice-versa. You can buy a co-owner out of a house with a new mortgage or remortgage. For example, if you divorce or wish to

Uk mortgage trends in 2024

UK Mortgage Trends in 2024

Will 2024 be a good year to buy or sell a property? Read on for Goldmanread’s helpful guide to the 2024 UK mortgage and housing market. 2023 was a challenging year for homebuyers and sellers alike, with high-interest rates and the spiralling cost of living making for an uncomfortable ride. Looking ahead to 2024, many

Working professionals mortgage rates

Do professionals get better mortgage rates?

As an educated professional, you have worked hard to put yourself on a stable and potentially lucrative career path. This can make getting a mortgage easier, and you may even find that some mortgage lenders offer better deals. Mortgage lenders tend to look favourably upon and offer competitive mortgage rates to professionals. They view professional

Scroll to Top