How Can You Get a Mortgage When You’re Self-Employed?

If you work for yourself, applying for a mortgage can feel more complex than it does for someone in standard employment. Irregular income, changing profits, and additional paperwork often lead people to question whether a self-employed mortgage is harder to obtain.

Being self-employed does not prevent you from getting a mortgage. However, lenders assess self-employed applications differently, focusing more closely on income consistency, financial records, and long-term affordability. This guide explains how self-employed mortgages work in the UK, how income is assessed, and what lenders typically look for.

This article is intended to provide general mortgage information only.

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What Counts as Self-Employed for a Mortgage?

You are usually classed as self-employed for mortgage purposes if you:

• Run your own business as a sole trader
• Are a partner in a partnership
• Are a director of a limited company and receive income via salary and dividends
• Work as a contractor or freelancer outside PAYE employment

Even if you pay yourself a salary, lenders may still class you as self-employed if you control the business.

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Can You Get a Mortgage If You’re Self-Employed?

In general terms, it may be possible to get a mortgage when you’re self-employed, provided you can demonstrate sustainable income and meet lender affordability criteria.

Lenders are not assessing whether you are self-employed, but whether your income is stable, provable, and likely to continue. Many mainstream lenders accept self-employed applicants, although criteria vary.

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How Do Lenders Assess Self-Employed Income?

Income assessment depends on how your business is structured.

Sole Traders and Partnerships

For sole traders and partnerships, lenders usually assess income based on:

• Net profit
• Typically averaged over the last two years

Some lenders may consider just the most recent year if income is increasing, while others require two or more years of accounts.

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Limited Company Directors

For limited company directors, lenders may assess income using:

• Salary plus dividends
• Or salary plus share of net profit (before corporation tax), depending on lender policy

This distinction can significantly affect borrowing calculations, as retained profits may or may not be included.

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How Many Years of Accounts Are Needed?

Most lenders require:

• At least two years of accounts or tax calculations
• Some lenders accept one year, but options may be limited

Accounts are usually supported by SA302s and tax year overviews from HMRC, or by certified accounts from an accountant.

The longer and more consistent your trading history, the wider your lender options may be.

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What If Your Income Has Changed Recently?

Income trends are important for self-employed mortgage applications.

• Increasing income may be viewed positively
• Falling income may lead lenders to base calculations on the lower figure
• Large fluctuations may reduce borrowing potential

Lenders often use averages to smooth out variations, particularly where income changes year to year.

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Affordability for Self-Employed Applicants

Affordability assessments for self-employed applicants follow the same principles as for employed applicants, but with greater scrutiny of income.

Lenders typically assess:

• Verified income
• Household expenditure
• Existing credit commitments
• Mortgage term and stress testing

Being self-employed does not remove the need to meet affordability requirements.

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Deposit Requirements for Self-Employed Mortgages

Deposit requirements are broadly similar to employed applicants. However, some self-employed borrowers may find:

• Higher loan-to-value options are more limited
• Larger deposits improve lender choice
• Lower LTVs may result in more competitive rates

Deposit size can be particularly important where income is variable.

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Credit History and Self-Employment

Credit history is assessed in the same way as for any other mortgage applicant. Missed payments, defaults, or high levels of unsecured debt can affect lender availability.

For self-employed applicants, a strong credit record can help offset concerns about income variability.

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Using an Accountant’s Support

Many lenders place value on professionally prepared accounts. An accountant can provide:

• Certified accounts
• Confirmation of trading history
• Clarity on income figures

While not always mandatory, accountant involvement can help ensure documentation meets lender expectations.

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Contractors and Freelancers

Contractors are assessed differently depending on how they are paid.

Some lenders assess contractors based on:

• Daily or hourly contract rates
• Length and continuity of contracts
• History within the same industry

Others treat contractors as self-employed and assess income via accounts. Criteria vary significantly between lenders.

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Self-Employed First Time Buyers

First time buyers who are self-employed face the same challenges as other self-employed applicants, plus deposit and affordability considerations.

Some schemes, such as shared ownership, may be explored by eligible applicants, but full affordability and credit checks still apply.

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Common Challenges for Self-Employed Applicants

People applying for a self-employed mortgage may encounter:

• More documentation requirements
• Fewer lender options with limited trading history
• Reduced borrowing where income fluctuates
• Longer assessment times

Understanding these challenges in advance can help manage expectations.

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Common Misunderstandings

“Self-Employed Mortgages Are Specialist Only”

Many mainstream lenders accept self-employed applicants, depending on circumstances.

“Gross Turnover Is Used”

Lenders usually assess net profit or salary and dividends, not total business turnover.

“Tax Efficiency Hurts Mortgage Chances”

Lower declared income can reduce borrowing potential, even where the business is profitable.

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Preparing for a Self-Employed Mortgage

Self-employed applicants often prepare by:

• Keeping accounts up to date
• Maintaining clear financial records
• Understanding how income is assessed
• Reviewing credit reports
• Planning applications around completed tax years

Preparation can help avoid delays during underwriting.

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Buy-to-Let and Self-Employed Mortgages

Buy-to-let mortgages are often assessed primarily on rental income, but personal income and credit history are still reviewed.

Being self-employed does not prevent buy-to-let borrowing, but lender criteria still apply.

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Long-Term Considerations

Self-employed income can change over time. Lenders consider:

• Industry stability
• Length of trading
• Evidence of ongoing work

Future remortgaging also depends on meeting lender criteria at that time, not just at initial application.

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Summary

A self-employed mortgage is not out of reach, but it is assessed differently from a mortgage for someone in PAYE employment. Lenders focus on income sustainability, trading history, affordability, and documentation rather than employment status alone.

Understanding how income is assessed and what lenders typically require can help self-employed applicants approach the process with realistic expectations.

This article provides general information only. For personalised guidance, regulated mortgage advice is required.