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Self-Employed Mortgages

Specialist mortgage advice for the self-employed

 With our expert advice, you will see that being self-employed does not make mortgage lenders less likely to approve your application than if you were employed.

What counts as Self-Employed?   

Lenders will view you as self-employed if you own more than 20% to 25% of a business, from which you earn your main income. Lenders are pretty flexible when it comes to the sector in which you work. Almost all occupations are acceptable providing that the business is viable, and the income is sustainable. You could be a builder, a plumber or any other tradesmen, a musician or an actor, you may work in the financial sector or have an online business, to name just some examples.

When you set up your own business you have a choice of three main business structures to choose from: sole trader, partnership or a limited company. Below we explain in detail the evidence of income you have to provide for each type of company.

What about contractors and freelancers?

These are just different ways of being self-employed. Being self-employed is an umbrella term for anyone who pays themselves through their own work and both freelancers and contractors fall in this category. The main difference is the way they work and the industries they are associated with but, in terms or income, paying tax or mortgage eligibility, same rules apply. Some freelancers and contractors are registered as sole traders while others chose to work through their own limited company.

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How is your income assessed? 

As a self-employed applicant you have access to the same range of mortgages as everybody else and you’ll need to pass the same affordability tests. But, because there is no contracted salary from an employer, self-employed people are required to provide more evidence of their income than other borrowers. The evidence of income depends on how your company is set up.

  • Sole trader

Sole traders are one-man bands and keeping accounts should be fairly straightforward. The lender will look at net profits when assessing your income. If you do your tax by self-assessment you will get a form called an SA302, which shows the total income received and total tax due. This form will be requested by some lenders as proof of income, while other lenders will look at your accounts and net profits only.

  • Partnership

If you go into business with someone else, you might set up a partnership. When assessing your income, mortgage lenders will look at each partner’s share of the net profit so make sure you have accounts that show exactly how much money you made so the lender can see your annual income. As with the sole traders, some lenders will request to see your SA302s as evidence of income.

  • Limited company

Setting up a limited company means you keep your business separate from your personal affairs. A limited company will have at least one director and, in some cases, a company secretary. Directors normally pay themselves a basic salary plus dividend payments and this is what will be taken into accounts by the lender when assessing your affordability.

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How we can help 

Using a whole of market mortgage broker like Fairview Financial will not only save you the hassle of the application process but will also give you access to a wider panel of lenders, including specialist lenders not available on the high-street, which can in turn increase your chances of getting a mortgage. Our experienced brokers also know when and where great mortgage deals are to be had, and which lenders would consider your application based on your circumstances, before you even start.

There are certain things you can do to boost your chances of getting a mortgage if you are self-employed:

  • Save as much as possible for a healthy deposit or, if you are a homeowner, it will help to have a good amount of equity in your existing property
  • Have a good credit history
  • Check your credit report and correct any issues. Bear in mind that lenders will not just credit check you but will also credit check your business by running a check on your business address
  • Get on the electoral roll
  • Make sure your accounts are up-to-date and in good order
  • Employ an accountant to prepare your self-employed accounts; some lenders prefer the accountant to be certified or chartered
  • Avoid buying certain properties such as flats above commercial premises or old or unusual buildings as lenders are less willing to lend on these
Your home may be repossessed if you do not keep up repayments on your mortgage.

Self-employed? Find out how we can help you get a mortgage.

Speak to an adviser now or let us call you back.

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Fairview Financial Ltd is an appointed representative of The Right Mortgage Limited, which is authorised and regulated by the Financial Conduct Authority. Fairview Financial Ltd is registered in England and Wales no: 10912424. Registered office: 107 Promenade, Cheltenham, GL50 1NW.

The guidance and/or advice contained within this website is subject to the UK regulatory regime and is therefore targeted at consumers based in the UK.

@ 2020 by Fairview Financial

Our Fees        
Our standard fee for residential and Buy-to-Let mortgages is £295 and this is paid when the mortgage is offered. 
We do not charge a fee to First-Time Buyers. We may however charge a fee of up to £495 for Shared Ownership mortgages and Help-to-Buy mortgages, due to the complexity of the work involved. 
Our fee for Equity Release is £795 and this is paid when the mortgage completes. 
For commercial mortgages our standard fee is between £495 and £995, depending on the level of complexity, and this is paid when the mortgage is offered.

We also receive a commission from the lender that will vary depending on the lender, product or other permissible factors. The nature of any commission model will be confirmed to you before you proceed. If we receive a commission, this will not affect the cost payable by you.

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