Getting a Mortgage When You're Self-Employed: What You Need to Know

Getting a Mortgage When You’re Self-Employed: What You Need to Know

Buying a home is one of life’s major milestones—but if you’re self-employed, getting a mortgage can feel like a daunting process. The good news? It’s absolutely possible. With the right preparation and a clear understanding of what lenders are looking for, you can secure a mortgage that suits your needs and sets you up for long-term success.

Whether you’re a freelancer, contractor, sole trader, or run a limited company, this guide will walk you through the key points you need to consider when applying for a mortgage in the UK.

Why Self-Employed Mortgages Are Perceived as Riskier

From a lender’s perspective, employed borrowers with a regular payslip represent predictability. Self-employed applicants, on the other hand, can have irregular income, fluctuating profits, and complex financial arrangements—making risk assessment a little more complicated.

That said, lenders aren’t opposed to self-employed borrowers—they just need more reassurance that you can repay the loan consistently. This means you’ll face a few extra hurdles during the application process.

Proving Your Income: The Most Important Factor

Your ability to prove a reliable income is key. Most lenders will want to see:

Two to three years of SA302 forms and tax year overviews from HMRC
Full business accounts, ideally prepared by a certified or chartered accountant
Bank statements (both business and personal) from the past six months

If you’re a company director, lenders often look at both your salary and dividends. If you retain profits within the company, some lenders may count those too—but many won’t, which can affect your borrowing power.

Common Documents You’ll Need

To avoid delays, get your paperwork in order early. You’ll typically need:

Proof of ID (passport or driving licence)
Proof of address (utility bills, council tax)
Proof of deposit (bank statements)
Evidence of income (SA302s, accounts, bank statements)
Existing credit commitments or debts

Having clean, well-organised documentation can make a big difference in how smoothly your application goes.

Credit Score Still Matters

Your credit history plays a major role, just like with any mortgage. If you’ve missed payments in the past, have a high credit utilisation rate, or defaults on your record, lenders may see you as higher risk.

Before applying, check your credit report with the major agencies (Experian, Equifax, and TransUnion). Fix any mistakes, settle outstanding debts if possible, and avoid applying for new credit cards or loans in the months leading up to your mortgage application.

How Much Can You Borrow?

This depends on a combination of your verified income, outgoings, and creditworthiness. As a ballpark, lenders may offer between 3 to 5 times your average annual income, but affordability checks have become stricter in recent years.

To get a rough idea, you can use a self employed mortgage calculator to see how much you might be able to borrow. This gives you an early indication of your budget, though actual offers can vary depending on the lender.

How to Improve Your Chances

Here are a few practical steps to strengthen your mortgage application:

Save a larger deposit – The more you can put down, the less risky you appear to lenders. Aim for at least 10%, but 15%–20% is even better.
Use an accountant – Professional accounts carry more weight with lenders and can help present your income in the best possible light.
Reduce debt – Pay down credit cards or loans to improve your debt-to-income ratio.
Be consistent – Try not to dramatically alter how you pay yourself in the run-up to applying.
Speak to a mortgage broker – Especially one with experience in self-employed applications. They can guide you toward lenders who are more flexible with non-standard income structures.

What If You’ve Been Self-Employed Less Than 2 Years?

This is where things get tricky. Most high street lenders want a two-year track record. However, there are specialist lenders who might accept one year of trading, especially if:

You were previously employed in the same industry
Your business has strong projected earnings
You have a sizeable deposit

In these cases, working with a broker is especially helpful—they’ll know which lenders to approach and how to present your case.

Limited Companies vs Sole Traders

Lenders assess these structures differently. Sole traders are usually judged on their net profit. Limited company directors, as mentioned, are assessed on their salary + dividends, but some lenders will also consider retained profits—a big plus if you’re not drawing a lot from your company each year.

Specialist Self-Employed Lenders

Don’t assume your bank is your best bet. Many lenders specialise in working with self-employed applicants and are more open to complex income or business structures. Some might even offer more flexible underwriting if your case makes sense, even if it doesn’t fit traditional lending criteria.

Final Thoughts

Being self-employed doesn’t mean you can’t get a mortgage—it just means the path might look a little different. Preparation, documentation, and the right guidance are everything.

Make use of tools like a self employed mortgage calculator early in the process to get a realistic view of your borrowing power. And if you’re unsure, seek advice from professionals who understand the nuances of self-employment.

With a little patience and a well-prepared application, there’s no reason your home ownership goals should be any less attainable.