Getting a Mortgage When Self Employed
Self employed borrowers face additional scrutiny when applying for mortgages, but with the right preparation and lender choice, approval is absolutely achievable. Lenders want to see evidence of stable, sustainable income - they're assessing whether your business can support mortgage payments reliably. For self-employed homeowners looking to remortgage, demonstrating consistent or growing income over recent years is key.
The good news is that self-employment is increasingly common, and lenders have adapted their criteria accordingly. Many now have specialist underwriters who understand the nuances of business accounts and can assess applications appropriately. The key is finding lenders whose criteria match your specific situation.
What Lenders Look For
Most lenders require at least two years of accounts or tax returns, though some will consider one year's evidence. They'll typically look at your SA302 tax calculations and tax year overviews from HMRC, plus your business accounts if you're a limited company director. The figures used depend on your business structure.
For sole traders and partnerships, lenders generally assess your net profit (after business expenses, before personal tax). For limited company directors, they'll look at a combination of salary and dividends - some lenders use salary plus dividends actually taken, while others will consider your share of net profit. Each lender calculates income differently, so the same accounts can produce different borrowing amounts.
Sole Trader vs Limited Company Director
How income is calculated differs significantly between business structures. Sole traders have simpler assessments based on net profit, but limited company directors can be more complex. If you pay yourself a small salary and retain profits in the company, some lenders may not recognise your full earning capacity.
Contractors working through limited companies (often called 'umbrella companies' or 'personal service companies') may benefit from specialist contractor mortgage products. These can calculate affordability based on day rate rather than dividends drawn, potentially increasing borrowing capacity significantly. Not all lenders offer this, but those that do understand the contractor market well.
Lenders That Specialise in Self Employed
While high street banks can approve self-employed applications, specialist lenders often offer more flexibility. Names like Kensington, Precise Mortgages, Aldermore, and others have built expertise in self-employed lending. They're more likely to take a holistic view of your circumstances rather than rigidly applying criteria.
Some lenders will consider just one year's accounts, accept retained profits, or use projected future earnings in certain circumstances. Finding the right lender for your situation can make the difference between decline and approval - this is where broker expertise adds real value.
Get Expert Self Employed Mortgage Advice
Don't let self-employment status hold you back from remortgaging. Our FCA-regulated brokers understand self-employed lending criteria across the market and can match you with lenders most likely to approve your application. Complete our form for a free consultation and let us find the right solution for your circumstances.