If you're self-employed, you can access the same mortgage products as everyone else, but will have to provide more proof that you can afford the repayments.
Lenders will calculate your average earnings across the time period of the accounts as part of their affordability checks.
Although some lenders will accept applications with less than three years of accounts, this could harm your chances of being approved for a great mortgage deal.
What's in this guide?
- How can we help?
- Eligibility for a mortgage
- Which documents are required?
- How to boost your chances of being approved for a self-employed mortgage
- Self-cert mortgages
- Mortgages on a temporary or a zero-hour contract
- CIS mortgages explained
- Self-employed mortgages: No proof of income or accounts
- Mortgages for contractors: How to make your application successful
- A guide to getting a mortgage when you are a company director
- Mortgages for limited companies
- Mortgages for sole traders
- Start your mortgage application
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Eligibility for a mortgage
Except for having to provide extra proof of income, there is very little difference between the eligibility criteria for self-employed applicants and everyone else.
You’ll need to have a suitably large deposit and be earning enough to comfortably afford the monthly mortgage repayments. Most mortgage providers will not lend more than 4-5 times the annual household income of the applicants.
Each lender will have unique minimum eligibility criteria when it comes to an applicant’s credit score. The better your score, the more likely you’ll be approved for a great deal. Even so, there are plenty of options for self-employed applicants with bad credit scores.
If you work with a mortgage advisor, you’ll be best placed to ensure you’re applying for a mortgage you’re eligible for. These professionals have specialist knowledge of the self-employed mortgage market and will be able to recommend the best deals available for someone in your financial position.
Which documents are required?
Just as with any mortgage applicant, you’ll need to provide proof of identity, proof of address and recent bank statements.
You can submit your accounts via any forms that were certified and submitted to HMRC by a qualified accountant.
Many self-employed applicants choose to submit their SA302 forms, which are issued by HMRC after you submit a paper tax return.
How to boost your chances of being approved for a self-employed mortgage
Self-employed applicants are regarded as riskier prospects by mortgage lenders. Here are some steps you can take to convince your lender you’re a reliable applicant.
- Borrow as little as possible. The more you borrow from a mortgage lender, the higher your monthly repayments will be. This means it will be tougher to pass a lender’s affordability checks. You can borrow less either by raising a larger deposit or applying to live in a cheaper house. Alternatively, check if you’re eligible to apply for a mortgage through government schemes, such as Help To Buy or Shared Ownership, which allow you to borrow less.
- Reduce your outgoings. Your lender will compare your income to your outgoings as part of its affordability assessments. By reducing your outgoings now, you can improve your chances of being approved for a mortgage in the future. You can start by haggling over the cost of your utility bills and trying to clear as many of your existing debts as possible.
- Improve your credit score. Your credit score improves every time you make a timely repayment on your debts and bills, so ensure you’re paying all of these on time via direct debit. Many mortgage applicants make timely repayments on a credit-builder credit card to boost their score further. Mortgage lenders use your credit score to judge how reliable you are at repaying debt, so it’s worth doing everything you can to boost it. It’s also worth ensuring your credit report is entirely accurate, as it’s common for errors to harm people’s applications. You can check yours for free by contacting any of the UK’s three credit reference agencies – Experian, Equifax or TransUnion (Callcredit).
- Consider a CIS mortgage. If you work in the construction industry, you could be eligible for a CIS mortgage. These tend to offer better terms than traditional mortgages and are easier to be approved for.
- Reduce the amount of credit you have access to. If you have access to credit you don’t need, it’s worth closing these accounts. Lenders perceive unused credit as an opportunity to get into unmanageable debt, which could count against you in your application.
- Work with a professional mortgage adviser. Mortgage advisers will point you towards the best deals likely to be within your reach. A rejected mortgage application can harm your credit score, making it more difficult to be approved in the future, so it’s worth using these professionals to ensure you get approved first time.
In the past, self-employed mortgage applicants were able to self-certify their income and still be approved for a mortgage.
However, this practice was banned by the Financial Conduct Authority, as many applicants would abuse these rules and end up in serious mortgage arrears.
It may be possible to obtain a self-cert mortgage from overseas, but this is a risky move. Our self-cert mortgages guide explains all the checks you should make before taking this route.
Mortgages on a temporary or a zero-hour contract
It’s possible for zero-hour and temporary contract workers to be approved for a mortgage, despite their fluctuating levels of income. Some lenders offer mortgages designed especially for these workers, although applicants will need to demonstrate a level of consistency when it comes to their past and future income. Our guide explains more.
CIS mortgages explained
If you are registered with the Construction Industry Scheme, you’ll be eligible to apply for a CIS mortgage. With these mortgages, your affordability is assessed based on your net income, rather than your net profit. Our guide explains how this works.
Self-employed mortgages: No proof of income or accounts
With no proof of income, it’s going to prove extremely difficult for self-employed applicants to be approved for a mortgage. If you’re in this position, see our guide for suggestions on the steps you can take.
Mortgages for contractors: How to make your application successful
It’s not simple for contractors to be approved for a mortgage, because their income tends to be inconsistent. However, there are several steps they can take to appear more reliable in the eyes of a mortgage lender. You can learn more with our guide.
A guide to getting a mortgage when you are a company director
Company directors are able to access the same mortgage deals as everyone else. However, they are required to provide additional evidence of their income, because their earnings are deemed less reliable than an employee’s wages. Our guide explains how a company director can be approved for a mortgage.
Mortgages for limited companies
It’s possible to apply for a buy-to-let through your limited company, rather than as an individual. In this case, your affordability assessment will be based on your company’s earnings. Often, this process can save you a lot of money. Our guide explains how it works.
Mortgages for sole traders
Sole traders have access to the same mortgages as everyone else, although it might be particularly difficult for these individuals to provide evidence of consistent income. Our guide provides step-by-step advice to help them.
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