Self-Employed Mortgages
Without a stream of monthly payslips to point to, proving your income as a sole trader or partner takes a bit more preparation – but it genuinely doesn’t make getting a mortgage harder in principle, just different in how your income is evidenced.
There’s No Separate “Self-Employed Mortgage” Product
It’s worth being clear from the outset: you’re applying for exactly the same mortgage products as anyone else. What differs is how your income is assessed – lenders rely on your accounts and tax records rather than payslips and a P60, since that’s simply the evidence available for how you’re paid.
What Counts as Self-Employed
Most lenders classify you as self-employed if you own at least 20-25% of the business you earn your main income from, whether you’re a sole trader, in a partnership, or a limited company director. Our Company Director Mortgages page covers the specific considerations for limited company income – salary and dividends, or retained profit – in more detail, worth reading instead of this page if that’s your situation. If you’re paid through the Construction Industry Scheme specifically, our Subcontractor Mortgages page covers that genuinely distinct assessment route.
How Sole Trader Income Is Assessed
As a sole trader, lenders look at your net profit – your turnover minus legitimate business expenses – typically shown on your SA302 tax calculation. On £100,000 turnover with £20,000 of expenses, your net profit for mortgage purposes would be £80,000. Most lenders use either your most recent year’s figure or an average of the last two years, generally taking whichever is lower to reflect a genuinely conservative view of your income.
How Partnership Income Is Assessed
If you’re in a partnership, lenders assess your specific share of the net profit, not the business’s total profit. On a partnership with £80,000 total net profit and a 50% share, your assessed income would be £40,000.
How Many Years of Accounts You Actually Need
Most mainstream lenders want two years of trading accounts or tax calculations, though a genuine minority will consider just one year, particularly where your income shows a clearly stable or growing trend. With only one year of accounts, expect a narrower pool of lenders and typically a larger required deposit, commonly 10-20% rather than the lower deposits available with a longer trading history.
Documentation You’ll Need
A typical application requires two years of SA302 tax calculations with corresponding tax year overviews from HMRC, or your full SA100 tax return, alongside three months of business bank statements and three months of personal bank statements, plus standard identity and deposit-source documentation.
You’re Not Assessed More Strictly on Credit
It’s worth understanding clearly that lenders don’t hold self-employed applicants to a stricter credit standard than employed applicants – your credit history is assessed on exactly the same basis. The genuine difference lies purely in how your income itself is evidenced and calculated.
Income Multiples
Once your income is properly calculated, lenders typically apply a multiple of 4 to 4.5 times, broadly in line with employed applicants, with some lenders stretching to 5 or 6 times for particularly strong applications.
High Loan-to-Value Is Genuinely Achievable
Being self-employed doesn’t rule out a 90% or even 95% loan-to-value mortgage – with the right lender and even just one or two years of accounts, high loan-to-value borrowing remains genuinely accessible, much as it would be for an employed applicant.
Why the Difference Between Your Accountant’s Advice and Your Mortgage Application Matters
Your accountant’s job is minimising your tax bill through legitimate expenses and allowances, which can mean your declared net profit understates your genuine earning capacity. It’s worth being aware of this tension before you apply, since a lender only sees the declared figure, not the fuller financial picture you might describe informally.
Why Consistency Matters More Than a Single Strong Year
Lenders generally want to see a consistent or genuinely growing trend across your trading history, rather than one exceptionally strong year sitting alongside weaker ones. A single unusually good year is often treated cautiously, since lenders want confidence your income is sustainable, not simply a one-off spike.
If Your Circumstances Are More Complex
If you also have multiple income sources, fluctuating earnings, or any adverse credit history alongside your self-employed status, our Complex Mortgages page covers this broader category, worth reading if more than one factor applies to your application.
Why Working With a Broker Matters Here
Different lenders assess self-employed income in genuinely different ways – some average two years, others take the lower figure, some accept just one year with the right supporting evidence. Working with a broker who understands these differences helps identify a lender genuinely suited to your specific trading pattern, rather than applying to a mainstream lender and hoping your figures fit their particular approach.
Frequently Asked Questions
How many years of accounts do I need for a self-employed mortgage?
Most lenders want two years, though some will consider one year, particularly with a strong or growing income trend and typically a larger deposit.
How is my income calculated as a sole trader?
Lenders use your net profit – turnover minus legitimate business expenses – typically shown on your SA302 tax calculation.
Can I get a 95% mortgage while self-employed?
Generally yes, with the right lender and even just one or two years of accounts, high loan-to-value borrowing remains genuinely achievable.
Am I assessed more strictly on credit history because I’m self-employed?
No – credit history is assessed the same way regardless of employment status; only your income evidence differs.
What if my income varies significantly year to year?
Lenders generally want to see a consistent or growing trend rather than one exceptionally strong year – it’s worth discussing genuinely fluctuating income with your broker directly.
Get in touch with details of your trading history and accounts, and we’ll help you find a lender genuinely suited to your specific circumstances.
