Looking for a mortgage when you're self-employed?
We take you through how to prepare for a mortgage application without an employer to vouch for you.

Last updated: 23/07/2020 | Estimated Reading Time: 4 minutes

How to get a mortgage if you’re self-employed

Getting a mortgage when you are self-employed can be challenging. There are lots of hoops to jump through and it can be harder to prove you have a stable income. However, with planning, it need not be so daunting. This guide will take you through what a self-employed mortgage is, and what you will need to prepare for the mortgage lender.

In This Guide:

What is a self-employed mortgage?

A mortgage lender will consider you self-employed if you own more than 20 to 25% of a business from which you earn your main income. Because you do not have an employer to vouch for your income, it can be harder to prove you have a stable income and lenders may require more evidence than if you were on a similar wage under an employer.

In the past, you could apply for a self-certification mortgage however these are no longer available. This means you will have to apply for a mortgage in the same way as everyone else.

In theory, you should have access to the same mortgage deals, and you will have to pass the same affordability tests. However, being your own employer can make this harder.

Self-employed mortgages can sometimes be more expensive, but by providing enough information about your income you should qualify for the same rates as someone with a comparable salary in a permanent full-time job.

You can prevent your mortgage from being too high by saving as much as possible for a deposit. The more deposit you can put down the better your mortgage rates are likely to be. Checking your credit rating and correcting any mistakes on your report can also help.

Is it harder to get a mortgage if you’re self-employed?

It can be more challenging to get a mortgage when you’re self-employed. This is because you need to prove you have a reliable income. Normally, this will just mean jumping through a few extra hoops.

However, if you do struggle to get a mortgage with a mainstream bank you may need to apply with a specialist lender. If this is the case, you could find the rates are higher and your choice of mortgages may be limited.

If you are well-prepared, a self-employed mortgage should be easy to apply for. Knowing what to expect from a mortgage lender will help you get access to the best mortgage deals without too much difficulty.

How to prepare for your mortgage application

If you are looking to apply for a self-employed mortgage, it’s a good idea to start preparing as early as possible. Mortgage lenders will want to know you can afford your mortgage repayments, so providing the right paperwork is essential for access to the best mortgage rates.

To ensure you are eligible for competitive rates you need to ensure you have:

  • Two or more years of certified accounts.
  • SA302 forms, or a tax year overview for the past two or three years.
  • Six months of bank statements.
  • Some lenders will also require evidence of upcoming contracts, dividend payments or retained profits depending on your form of self-employment.

Lenders prefer your accounts provided by a chartered accountant so that they can be certain of reliability. Doing this in advance will greatly improve your chances of getting accepted for a mortgage.

Lenders will usually look at the average profit you’ve earned over the past few years. This can make it difficult to get a mortgage if your profits have suffered in the last few years. Saving for a larger deposit or ensuring you have a good credit rating can help to overcome this. 

Saving for a larger deposit can also help you get access to a better mortgage deal as you will pose a lower risk to the lender if you can buy a larger portion of the property outright.

Providing evidence of future clients will also help make you more appealing to lenders as they will prove your income is continuous. Being well-prepared can really help you get a self-employed mortgage so if you are thinking of buying a home in the future it’s a good idea to start preparing early.