Secure a Self Employed Mortgage Deal

To get a mortgage when you’re self-employed, in addition to the typical mortgage requirements (such as good credit score, financial history, deposit, etc), you’ll have to provide additional documentation to evidence your income, such as certified accounts and SA303 forms to show you meet affordability criteria.

Most lenders will require you to prove your income by producing at least two years’ certified accounts (preferably prepared by a certified, chartered accountant), SA302 forms or tax year overviews from HMRC covering the previous two or three years (minimum), evidence of your upcoming contracts (providing you are a contractor), and/or proof of dividend payments and retained profits, should you be a company director. These can depend largely on the lender.

Other documentation you will have to produce will be a passport, a driving license, council tax bills, at least three months of utility bills, and at least six months’ worth of bank statements.

Yes, you can remortgage if you are self-employed. The process for remortgaging when you are self-employed isn’t drastically different from any other remortgage. The bulk of the difference comes from evidencing your financial income. As with getting a mortgage when self-employed, lenders will look at your ability to make repayments.

If you are remortgaging as a long-term self-employed person, you will likely be required to produce 2 years’ worth of SA302s or accounts up to the time of your application. Evidence of future contracts and revenue streams can be beneficial to your application.

If you are remortgaging as a newly self-employed person, or you have little or no self-employed income records, you could consider remortgaging with the same lender by means of a ‘product transfer’. This means you remortgage with the lender you currently have but change your mortgage to another one that has more suitable rates.

Though some lenders insist on reviewing at least two years of certified accounts when processing mortgage applications, it is entirely possible to obtain a self-employed mortgage with only one year of accounts – though options may be slightly limited. If you’re self-employed and looking to apply for a mortgage with one year of accounts, seeking the assistance of an experienced mortgage broker may be the best option to help ensure your application’s success.

Though bad credit can prove to be a significant hurdle to self-employed individuals trying to obtain a mortgage, it doesn’t necessarily make approval impossible. It is highly advisable to contact an expert advisor or broker prior to application and to apply their knowledge and experience throughout the application, submission, and negotiation process. 

Fees Free Mortgages’ experienced advisors will work with you from the very beginning to create the strongest possible application, before sourcing the most suitable lenders for a self-employed individual with bad credit through our extensive network of lenders.

There is no decisive test available to indicate whether or not individuals are self-employed, however, the UK government has specified an extensive list of indicators and guidelines, many of which revolve around your level of independence. According to these indicators, you’re likely to be classed as self-employed if you: 

Have the power to dictate how a business is run.

Risk your own money in the business.

Are responsible for the losses as well as profits of your business. 

Provide the main items of equipment you need to do your job.

Could send a substitute or are free to hire other people on your own terms to do the work you have taken on and pay them at your own expense. 

Are responsible for correcting unsatisfactory work in your own time and at your own expense.

Have the ability to work for others at the same time as providing services for a particular employer.

Though document requirements vary slightly from lender to lender, most lenders will require the following documents or evidence as proof of income:

Two or more years’ certified accounts (it is possible to obtain mortgages with one year of accounts, but options may be limited. Further evidence of regular work of income may assist in convincing lenders of your ability to repay in this case.)

Evidence of dividend payments or retained profits (if you’re a company director) 

Proof of identity will be required by any reputable lender. This may be required in the form of a:

Passport 

Driving licence 

Council tax bill 

Utility bills dated within three months 

Bank Statement (these may be examined in-depth as an additional method of establishing mortgage affordability)

Though not essential requirements, having a good credit history, and significant deposit hay help bolster your application.

The way in which self-employment income is calculated for a mortgage varies depending on your personal role. Whilst sole traders can expect lenders to look at your pre-tax net profit over the last two years, limited company directors are generally required to submit their salary and dividends from the same period. Company profit may also be taken into consideration, depending on the individual requirements of the lender.

Gaps in income or high income peaks can affect mortgage calculations equally. If you believe income calculation may be a significant hurdle in your mortgage journey, contact an experienced mortgage broker, such as Fees Free Mortgages. Our friendly advisors are happy to offer impartial advice and guide you through the application process.