Getting a self-employed mortgage with one year of accounts or less

Getting approved for a mortgage if you've been self-employed for less than a year is tricky, but it's not impossible.

If you’re self-employed, lenders like to see as much evidence as possible that you’d be able to comfortably afford your monthly mortgage repayments.

It’s common for lenders to ask for at least three years’ worth of accounts before even considering your application. However, there are a few that may offer mortgages to those with just one year’s worth of accounts. There may even be some that will look at your application if you’ve been in business for only 9-10 months.

Your choice of lenders will be smaller in this situation, and you may only be offered inferior rates.

Nevertheless, you can still get a foot on the property ladder.

Why is it harder to get a mortgage with just a year’s worth of accounts?

Lenders need to be sure their applicants are able to afford the repayments on any loans offered.Because self-employed applicants don’t have guaranteed income, it’s harder for lenders to achieve this level of certainty.

If an applicant can show consistent levels of income over three years or more, this provides a lot more evidence of what their future income is likely to be.

In the eyes of a lender, one year’s worth of accounts isn’t enough evidence to prove that an applicant will be able to afford their repayments over the length of a mortgage term. Perhaps they had a fortunate year, during a favourable market.

Getting a mortgage with less than one year’s worth of accounts

In the past, it was impossible for self-employed applicants to be approved for a mortgage without at least one year’s worth of accounts. This is because lenders needed to provide physical evidence they’d lent responsibly.

However, it may now be possible that some lenders will consider applications from those who have been self-employed for around nine months or more.

These applicants could potentially be offered a “mortgage in principle”, for a deal after they submit their first year’s worth of accounts.

Most mortgages in principle last 90 days, so the applicant could begin their property hunt, ready for their mortgage to be confirmed after their first year of self-employment.

How do I find lenders that will work with self-employed applicants?

The best way to find a suitable lender is to work with a professional mortgage adviser. These individuals have enough specialist knowledge to recommend the lenders most likely to work with applicants in your situation.

What documents do I need to provide?

Your accounts will need to include the same figures as those submitted to HMRC.You could provide your SA302 forms, which are issued by HMRC after you submit a paper tax return.

Alternatively, you could send through any forms that were certified and submitted to HMRC by a qualified accountant.

You’ll also need to provide proof of identity, proof of address, recent bank statements and other documents required of all mortgage applicants.

Tips to be approved for your mortgage application

Just because you find a lender that will consider applicants with one year of accounts, it doesn’t mean they’ll approve you.

In many cases, you’ll need to show more proof you’re a reliable borrower than an individual with three years of accounts.

Here are some tips to boost your odds of being approved for a mortgage with one year’s worth of accounts.

  • Good income vs outgoings. As part of its affordability assessments, your lender will check your recent bank statements to compare your income to your outgoings. This is to ensure you can comfortably handle your mortgage repayments, as well as your other financial commitments. The more leeway between your income and outgoings, the better.
  • Clear your debts. If you’re being charged interest on existing debt, this will harm your perceived affordability. Pay off as many debts as you can before applying for a mortgage.
  • Fix your credit score. Your credit score is a numerical representation of your past reliability with financial commitments. If you make timely repayments on debts and bills, your credit score grows. If you go overdrawn or miss repayments, it plummets. Ensure your credit score is healthy by making all bill payments on time via direct debit. Making timely repayments on a credit-builder credit card can help your score grow even faster. You can check what your credit score is here.
  • Refrain from making too many credit applications. Each time you apply for credit, the lender will credit check you, temporarily harming your credit score. It’s therefore best not to apply for too many financial products in the months leading up to your mortgage application.
  • Reduce the amount of credit you have access to. Additional access to credit, perhaps from a business overdraft or business line of credit, can spook lenders. They see this as an opportunity for you to get into unmanageable debt, so it’s worth closing any products you no longer use.
  • Amend mistakes on your credit report. If your credit report has errors on it, this could harm your mortgage application. You can check and amend your credit report by contacting any of the UK’s three major credit reference agencies – Experian, Equifax or TransUnion (Callcredit).
  • Work with a professional mortgage adviser. These individuals will help you prepare your application and point you towards the most likely to approve someone in your circumstances.

Finder survey: Are you currently self-employed?

Source: Finder survey by Censuswide of Brits, December 2023
Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
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2 Responses

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    HannahMarch 12, 2020

    Hello, myself and my partner are hoping to look for a house around July 2020, I am employed full time and my partner is self- employed and has only been working since November 2019. Is there any mortgage lenders that would consider giving us a mortgage for a property around £240000.

    Many Thanks

      MayMarch 13, 2020Finder

      Hi Hannah,

      Thank you for getting in touch with Finder.

      While we can’t really tell which lender can approve your mortgage application, your approval will entirely depend on whether you meet all the eligibility criteria of the lender. As to the amount you can borrow, that will be based on the lender’s assessment whether they see you a responsible borrower and if you can finance the deposit. The larger deposit can actually help the application getting approved.

      Meantime, if you’d like to know your options for a mortgage lender, you can use our guide here. It’s a complete guide where you can see rates offered in 2020, list of lenders that you can contact and check through their site, and even mortgage calculator that you can use if you like to compute the estimate of how much you can borrow. When you find the one you think that suits your needs, best to check the eligibility criteria and review the terms and conditions of the mortgage.

      Alternatively, you can also speak to a mortgage broker who can assist in finding a range of borrowing options for you.

      I hope this has helped.


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