Self-Employed Mortgages

Being self-employed does not stop you getting a mortgage. Lenders treat self-employed applicants on the same affordability rules as everyone else, but they verify your income differently — usually from one to three years of accounts or tax records rather than payslips. Get your paperwork in order and the process is very similar to any other application.

In this insight we explain what lenders ask for, how sole traders, contractors and limited-company directors are each assessed, and how to give yourself the best chance of acceptance.

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Key Takeaways

• Most lenders want two to three years' accounts or tax records, but some will consider one year with strong supporting evidence.
• You are usually classed as self-employed if you own 20%–25% or more of a business.
• How your income is measured depends on your structure — sole trader profit, day rate, or salary plus dividends (or retained profit) for company directors.
• A larger deposit and clean bank statements widen the range of lenders willing to help.

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Who counts as self-employed?

Lenders generally treat you as self-employed if you are a sole trader, in a partnership, a contractor or freelancer, or you hold a stake of roughly 20%–25% or more in a limited company. Even if your company pays you a salary, that shareholding usually puts you in the self-employed category for underwriting.

How many years' accounts do you need?

Most high-street lenders ask for two to three years of figures and take an average, though a rising trend may lead them to use the most recent year. If profits have fallen, many will use the lower or latest figure instead.

• Three years: the widest choice of lenders and rates.
• Two years: still very achievable across mainstream lenders.
• One year: possible with a smaller pool of lenders, usually needing extra evidence such as future contracts, an accountant's projection or a healthy deposit.

If you have recently gone self-employed after being employed in the same line of work, some lenders take a common-sense view. Our guide on getting a mortgage if you just started a new job covers similar ground.

Proving your income: SA302 and Tax Year Overview

The key documents are your SA302 tax calculation and the matching Tax Year Overview, both downloadable from your HMRC online account. Together they confirm the income you declared and the tax you paid. Read our full guide to the SA302 and Tax Year Overview for how to obtain and read them.

Lenders may also ask for finalised accounts prepared by an accountant, plus recent business and personal bank statements.

How different structures are assessed

Sole traders and partnerships — lenders use your net profit (partnership: your share of it) as shown on your SA302.

Contractors and day-rate workers — some specialist lenders will assess you on your day rate rather than accounts, typically multiplying the daily figure by around 46–48 working weeks. This can produce a stronger income figure than filed accounts, but you usually need an established contract and a track record in the field.

Limited-company directors — the default is salary plus dividends drawn from the business. If you leave profit in the company to reduce tax, that can shrink the income a lender will use. A minority of lenders will assess on salary plus your share of retained (net) profit, which can help directors who reinvest. For anything unusual it is worth exploring a specialist mortgage route.

Once you know the income figure a lender is likely to use, you can get a feel for the monthly repayments:

Deposit and affordability

Self-employed applicants are not automatically asked for a bigger deposit. A 5%–10% deposit can be enough, but a larger deposit (15% or more) opens up more lenders and better rates, which is especially useful if your accounts show only one or two years or fluctuating profits.

Affordability is judged the same way as for employed applicants: income, regular commitments, credit history and existing debts. Keeping business and personal spending tidy in the run-up to applying makes a real difference.

Tips to improve your chances

• File your tax returns on time and wait 72 hours before downloading fresh SA302s.
• Avoid aggressively minimising declared profit in the years before you apply.
• Keep an eye on your credit file and clear small debts.
• Save the largest deposit you comfortably can.
• Use an accountant — several lenders prefer accounts signed off by a qualified or chartered accountant.

If you have recently moved to the UK as well as being self-employed, see our guide on getting a mortgage with less than 3 years in the UK.

Can I get a mortgage with only one year of accounts?

Yes, but the choice of lenders is smaller. Strong supporting evidence — future contracts, an accountant's reference and a good deposit — improves your odds.

Do lenders use my profit or my drawings?

For sole traders they use net profit. For company directors they usually use salary plus dividends, and occasionally salary plus retained profit.

Will being self-employed mean a higher interest rate?

Not by itself. If your income is well evidenced you can access the same rates as employed applicants; specialist lenders (sometimes with higher rates) are mainly for one-year or complex cases.

Do I need an accountant?

Not always, but many lenders prefer accounts prepared by a qualified accountant, and it can widen your options.