How Do You Get a Mortgage When Self-Employed in the UK?

Navigating the self employed mortgage market as a self-employed borrower can feel daunting. Without regular payslips and salary slips, lenders often perceive you as higher risk and impose more stringent checks. Yet, with careful preparation, clear documentation and the right professional support, millions of self-employed individuals secure competitive mortgages every year. This guide sets out, step by step, how you can successfully obtain a mortgage when you work for yourself in the UK.

Am I Considered Self-Employed for Mortgage Purposes?

Lenders define self-employment widely: you’re self-employed if you own 20 per cent or more of the business generating your main income, whether as a sole trader, partner or limited-company director. If you’ve only just started trading, some specialist lenders may consider one year’s accounts or interim management accounts—but expect higher rates or a larger deposit.

Gathering Essential Documentation

To satisfy lender checks, you will generally need:

• Two full years of certified business accounts, ideally prepared by a qualified accountant.

• SA302 forms or Tax Year Overviews from HMRC covering the same period.
• Evidence of any dividend payments if you draw income that way.
• Recent bank statements (usually six months) to show income and expenditure patterns.
• Proof of identity and address, such as a passport or driving licence, plus a utility bill dated within three months.
• Proof of deposit, either via saved funds or gifted deposits with accompanying letters.

Calculating Your Income and Affordability

Unlike employed applicants, lenders must calculate mortgage affordability from your declared profits. Most will base their decision on your average net profit over the past two tax years, adjusting for any one-off expenses or benefits. You can use online affordability calculators as a rough guide, but remember each lender applies its own stress-testing, often adding a few percentage points to the interest rate when running the numbers.

Understanding Lender Criteria and Credit Requirements

Most high-street lenders will consider:

Credit score, which should ideally be above 620.

Deposit size — larger deposits (15–25 per cent) can unlock better rates.

Time trading — two years’ accounts is standard; one year may suffice with an excellent credit history.

Business sector — stable sectors like IT or healthcare tend to face fewer restrictions than more volatile fields.

Lenders may also look at the consistency of your income, checking for any large fluctuations in your accounts. A steady or growing profit profile will work in your favour.

The Application Process and Agreement in Principle

Decision in Principle (AiP)

Begin with an AiP to gauge how much you might borrow without impacting your credit score. Applying online for an AiP helps you move quickly once you find a property.

Full Application

Once you have an offer accepted, submit your full documentation. Expect underwriters to query unusual expenses or ask for clarifications on your accounts.

Valuation and Offer

After a satisfactory valuation, the lender will issue a formal mortgage offer, typically within four to six weeks of full application—though specialist lenders may take longer.

Choosing the Right Mortgage Product

Self-employed borrowers can choose from a variety of products:

• Fixed-rate mortgages, offering stability by locking in your rate for two, three or five years.
• Variable-rate or tracker mortgages, which may start cheaper but can rise and fall with the Bank of England base rate.
• Discounted variable rates, which offer an initial reduction off the lender’s standard variable rate (SVR).
• Specialist self-employed products, available through brokers who know which lenders favour contractors, freelancers or company directors.

Selecting the right product depends on your risk appetite and future plans—such as plans to scale your business or take a career break.

Business Structures and Their Impact

Sole Trader

As a sole trader, you keep all profits and declare income via Self Assessment. Lenders will scrutinise your net profit and SA302 forms. Accurate bookkeeping and clear separation between personal and business expenses are vital.

Partnership

Partners share profits according to the partnership agreement. Each partner’s share of income must be clearly documented. Ensure your partnership accounts reflect income splits accurately, as lenders will assess each applicant individually.

Limited Company

Directors receive a basic salary and dividends. Profits retained in the company may not always be included in affordability calculations unless you approach specialist lenders. Having a clear dividend policy and properly documented board minutes can help.

How to Prove Your Income

HMRC SA302 and Tax Year Overviews

Your SA302 or Tax Year Overview is the gold standard for lenders. You can download these from your HMRC online account or request them by post. They confirm your declared income and tax paid, giving underwriters confidence in your figures.

Retained Profits and Dividends

If you choose to retain profits in your limited company, check with your mortgage adviser which lenders will include these sums in their calculations. Some private banks and high-net-worth lenders are more flexible, but mainstream providers often focus solely on salary plus dividends actually paid out.

The Role of Credit History

A clean credit record is crucial. Lenders will check both your personal and business credit files. To optimise your score:

• Pay all bills and credit cards on time.
• Keep credit utilisation below 30 per cent.
• Avoid multiple credit searches in the months before applying.
• Register on the electoral roll at your current address.

You can check your score for free via Experian, Equifax or TransUnion—correct any errors at least six weeks before your application.

The Value of an Accountant

A qualified accountant does more than prepare your year-end accounts. They can:

• Ensure your books are “lender-friendly”, avoiding unnecessary expenses that reduce declared profits.
• Provide interim management accounts if you have under two years’ trading.
• Advise on dividend timing to maximise declared income.
• Offer professional reassurance to underwriters reviewing your application.

Engaging an accountant early in the process can make a significant difference to the outcome of your mortgage application.

The Importance of a Mortgage Broker

A whole-of-market mortgage broker can significantly streamline the process. They:

• Match you to lenders most likely to accept your income profile.
• Handle paperwork, saving you hours chasing documents.
• Negotiate rates and fees on your behalf.
• Guide you on product selection, balancing fixed-rate stability with tracker flexibility.

Broker fees typically range from £300 to £500, but they often pay for themselves through better rates or exclusive deals.

Alternative Lenders and Specialist Products

If mainstream banks require two full years of trading, consider:

Building societies, some of which accept one year’s or interim accounts.

Specialist self-employed lenders, who tailor products for freelancers, contractors and company directors.

Private banks, for high-net-worth individuals seeking bespoke lending arrangements, including portfolio income considerations.

A good broker will know which providers to approach and can present your case in the best possible light.

Frequently Asked Questions

1. Can I get a mortgage with only one year of trading?

Yes. Some lenders and building societies accept one year’s certified accounts, especially if supported by a sizeable deposit and a strong credit record.

2. What is the minimum deposit required?

Most lenders ask for at least 5 per cent, but 10–15 per cent is more realistic for self-employed applicants to secure competitive rates.

3. How do I obtain SA302 forms?

Log in to your HMRC online account and download your SA302 tax calculations, or request them by post if you prefer.

4. Will retained profits count towards my mortgage income?

Only certain lenders include retained profits in their affordability calculations. Discuss your profit retention strategy with your mortgage broker to find suitable products.

5. How long does the self-employed mortgage process take?

From submitting a Decision in Principle to a formal mortgage offer usually takes four to eight weeks. Specialist lenders may require additional time for underwriter review.

Conclusion

Securing a mortgage as a self-employed professional is entirely achievable with the right preparation. By gathering comprehensive documentation, engaging a chartered accountant and enlisting a whole-of-market broker, you can present a compelling case to lenders. Whether you’re a sole trader, partner or company director, understanding lender criteria and choosing the most suitable product will pave the way to successful home ownership. Remember, clarity and organisation are your strongest assets—start early, stay informed and approach the process with confidence