Self-employed income isn't assessed one way
Being self-employed doesn't automatically put home ownership out of reach. But the figures that matter to a lender can depend on your business structure, trading history and the way you receive income.
Sole traders and partnerships: Lenders may look at taxable profits, trading history and whether the latest figures reflect a changing business. The figures on your tax calculations may tell a different story from turnover.
Company directors: Salary and dividends are one approach. Some lenders may also consider an appropriate share of company profits, subject to their criteria, ownership requirements and supporting evidence.
Contractors: The nature of your contracts, day rate, continuity of work and employment history may affect how income is assessed. The evidence required varies by lender.
The same accounts can tell different stories.
TRADING HISTORY: How long have you been self-employed, and what were you doing before?
INCOME TREND: Are your profits increasing, stable or falling, and what's behind any change?
HOW YOU'RE PAID: Salary, dividends, taxable profit, contract income or a combination?
BUSINESS STRUCTURE: Sole trader, partnership or limited company. Has that changed recently?
LATEST FIGURES: Do your most recent accounts or tax figures tell a different story from previous years?
THE WIDER PICTURE: What commitments, credit history or other income could affect the application?
The right mortgage isn't just about the rate. It starts with finding a lender whose approach fits your circumstances.
Only have one year's accounts?
Some lenders may consider applicants with one year's trading figures, depending on the wider circumstances and the evidence available. Previous experience in the same industry, the nature of the business and the latest financial information may all be relevant to the research.
One year doesn't automatically mean no, but it does mean the detail matters.
Limited company directors: your payslip may not tell the whole story.
If you're a director, what you take home isn't necessarily the same as the profit your business generates. Different lenders may take different approaches to assessing income.
SALARY: What you're paid through PAYE.
DIVIDENDS: Distributions you've taken from company profits.
COMPANY PERFORMANCE: The wider financial picture, including profits and the proportion of the business you own, where relevant to lender criteria.
Choosing to draw less from your company doesn't automatically mean every lender will assess you on less. I'll investigate which assessment methods may be relevant to your circumstances.
Self-employed and remortgaging?
Your business may have changed considerably since you arranged your current mortgage. Perhaps profits have increased, you've changed company structure, you're drawing income differently or your latest figures look different from previous years.
A mortgage review should look beyond the deal's end date. We'll consider your current arrangement, your business and financial position, and whether staying with your lender or looking elsewhere makes sense.
Your mortgage review shouldn't start with a rate. It should start with where your business is heading.
Self-employed with adverse credit?
A complicated credit history alongside self-employed income needs careful consideration of both. I'll look at what happened, when it happened and your financial position now, alongside the way lenders may assess your business income.
Explore adverse credit mortgages
Frequently asked questions
How much can I borrow if I'm self-employed?
There isn't a single income multiple that applies to everyone. Lenders assess your income evidence, expenditure, credit history and other circumstances using their own criteria and affordability calculations.
How many years' accounts do I need?
Requirements vary. Many lenders look for an established trading record, while some may consider a shorter history in certain circumstances. We'll start with the evidence you actually have.
Can I get a mortgage with only one year's accounts?
Potentially. Some lenders may consider it, but the type of business, previous employment and quality of evidence can matter.
How is a limited company director's income assessed?
Some lenders consider salary and dividends; others may consider an appropriate share of company profits. Shareholding, accounts and lender criteria can affect the approach.
What if my income has increased recently?
Some lenders may consider the latest figures, while others use averages or take a more cautious approach. We'll need to understand the reason for the change and check the current criteria.
Can I get a mortgage if I'm self-employed and have bad credit?
Potentially, depending on the credit events, dates, amounts, current status and wider affordability. The right starting point is a careful review, not a promise of approval.
When should I review my mortgage?
Ideally, before your current deal ends. The appropriate timing depends on the existing product, lender and whether your business figures are due to change.
Explore income protection and other cover.