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Being self-employed doesn’t mean you can’t get a mortgage but it can be more difficult. So if you’re one of over 4 million people in the UK who is self-employed, here’s everything you need to know about getting a self-employed mortgage.
Yes, it’s possible to get a mortgage when you’re self-employed although you won’t see specific products named as self-employed mortgages. You will apply for the same mortgage as someone who is employed, but you will have to provide different evidence about your income (read on for more on this).
Mortgage rates on self-employed mortgages aren’t necessarily higher; if you meet the lender’s lending criteria, you won’t be charged more just because you are self-employed.
However, lenders’ criteria is often stricter if you’re self-employed. This may mean you have fewer lenders to choose from and this could mean you have to pay a higher rate. If you’re going to struggle to get accepted by a mainstream lender and need to apply to a specialist lender it’s likely that you’ll pay higher rates.
To get a self-employed mortgage you should:
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
If you own more than 20% of a business, from which you earn your main income, lenders will generally consider you as being self-employed. You could be a sole trader, partner, company director or contractor.
How your self-employed earnings will be calculated for mortgage purposes depends on the type of self-employed worker you are.
As with employed applicants for a mortgage, you’ll need bank statements and details of debt repayments and outgoings such as childcare costs and pension contributions. But to get a self-employed mortgage you’ll also usually need to provide:
Some lenders may offer you a mortgage if you only have 1 year of accounts. However, some lenders may require that you’ve had previous experience in the field of work. It’s advisable to speak to a fee-free mortgage broker as they’ll explain which lenders may lend to you.
It can be very difficult to get a mortgage if you’re newly self-employed but there may be exceptions such as if you were employed previously and will be contracting with the same firm or if you have a large deposit. Again, it’s crucial to get advice from an expert mortgage broker on this.
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
Self-certification, or self-cert, mortgages allowed self-employed people in the UK to self-certify how much they earned without needing to provide evidence. However, self-certification mortgages were banned in 2014 because of concerns that people were getting mortgages they couldn’t afford.
Ways you can improve your chances of getting your self-employed mortgage application approved include:
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
Lenders typically lend up to 4.5 times your income, although this will depend on your circumstances. Use our handy How much can I borrow calculator
You may find it harder to get a self-employed mortgage in the UK if:
When you’re self-employed, if you remortgage it works in a similar way. Although, depending on your circumstances it might take a bit longer to find the best mortgage deal so don’t hang around. If your current mortgage deal ends in the next six months, you should start the remortgage process now. You can lock in a rate six months in advance then keep it under review in case a better rate comes up before you complete your switch. Read our guide Should I remortgage now?
It is possible to get a Buy to Let mortgage if you’re self-employed but it will depend on your circumstances. Buy to Let mortgages are based on the value of the property and its rental potential but most lenders will have a minimum income criteria too, usually £20,000 or higher. So the lender will consider your self-employed income. It’s advisable to speak to an expert fee-free mortgage broker as they’ll be able to explain your Buy to Let mortgage options if you’re self-employed.
The best self-employed mortgage lenders will depend on your circumstances. For example, if you can show three years of accounts, have a large deposit and a good credit history, you may have your pick of lenders. But if your circumstances are a bit trickier, the best self-employed mortgage lenders for you will be the ones that are most likely to accept your mortgage application. A fee-free mortgage broker will be able to explain your options.
Many mainstream mortgage lenders accept applications from the self-employed, although each has its own lending criteria. Lenders that accept the self-employed include:
If you’re looking for a self-employed mortgage advisor, speak to our award-winning partners L&C. You’ll get expert advice, plus L&C are fee-free so it won’t cost you a penny.
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
Yes, it may be possible to get a 95% mortgage if you’re self-employed but it will depend on your circumstances. However, most lenders usually require at least a 10% deposit if you’re self-employed. So it’s a good idea to chat it through with a fee-free mortgage broker.
Yes you can buy through the shared ownership scheme if you’re self-employed. Although there are pros and cons to consider, read our guide What is shared ownership? Is it worth it?
Most lenders require you to have at least two years of accounts to offer you a self-employed mortgage. But this isn’t always the case so it’s a good idea to speak to a fee-free mortgage broker to find out your options if you’ve been self-employed for a shorter period.
HomeOwners Alliance Ltd is registered in England, company number 07861605. Information provided on HomeOwners Alliance is not intended as a recommendation or financial advice.
Mortgage service provided by London & Country Mortgages (L&C), Unit 26 (2.06), Newark Works, 2 Foundry Lane, Bath BA2 3GZ, authorised and regulated by the Financial Conduct Authority (FRN: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage.
HomeOwners Alliance Ltd is an Introducer Appointed Representative (IAR) of Seopa Ltd, for home insurance, authorised and regulated by the Financial Conduct Authority (FCA FRN: 313860).
HomeOwners Alliance Ltd is an Introducer Appointed Representative (IAR) of LifeSearch Limited, an Appointed Representative of LifeSearch Partners Ltd, authorised and regulated by the Financial Conduct Authority. (FRN: 656479).
Independent Financial Adviser service is provided by Unbiased, who match you to a fully regulated, independent financial adviser, with no charge to you for the referral.
Bridging Loan and specialist lending service provided by Chartwell Funding Limited, registered office 5 Badminton Court, Station Road, Yate, Bristol, BS37 5HZ, authorised and regulated by the Financial Conduct Authority (FRN: 458223). Your property may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it.
