Self-employed, and mortgage-ready
The hard part is rarely the mortgage. It is which of your figures the lender agrees to call income.
Working for yourself does not put a mortgage out of reach, whatever a comparison site may have implied. Lenders want self-employed business and lend to sole traders, directors and contractors every day. What changes is the paperwork, and how generously your figures are read.
That second part matters more than people expect. One lender takes your latest year, another averages the last two, a third takes the lower figure if your income has dipped. Sending your accounts to the right one is most of the game, and it is the part we do before anything is submitted anywhere.
Which figure counts as your income
- Sole traders and partnerships
- Lenders work from your net profit before tax, as shown on your tax calculations, not from your turnover. Two years is the common requirement, and a handful of lenders will work from one.
- Limited company directors
- Most lenders assess salary plus dividends. If you leave profit in the company for sensible reasons, that figure understates what you actually earn, and some lenders will use salary plus your share of the company's net profit instead. Knowing which ones is most of the value here.
- Contractors
- Many lenders can work from your day rate rather than your accounts, which often produces a considerably higher assessable income for exactly the same work.
On the same accounts, the gap between the most and least generous lender is routinely tens of thousands of pounds.
The questions self-employed clients actually ask
I have only got one year of accounts.
Two full years of accounts or tax calculations is the common requirement, but some lenders will work from one, particularly if you were doing similar work as an employee beforehand. The options narrow; they do not disappear.
My latest year is down on the one before.
Most lenders will work from the lower figure rather than the average, but not all of them, and a good explanation genuinely helps. A dip with a reason behind it, maternity leave, an equipment purchase, a slow quarter that has already recovered, is read differently from a decline.
My accountant keeps my taxable income low.
Efficient for tax, awkward for borrowing: lenders can only use income you have declared. If a purchase is on the horizon, it is worth a conversation with us and your accountant before the next set of accounts is filed rather than after.
Do lenders just penalise the self-employed?
No. There is no self-employed surcharge, and you have access to the same products as everyone else. What differs is evidencing the income, which is exactly the part we prepare properly before anything goes in.
What paperwork will I actually need?
Usually tax calculations with matching tax year overviews for the last two years, or full accounts for company directors, plus bank statements. We tell you exactly which documents before anyone applies, so nothing stalls three weeks in.
Let's find out where you stand.
One conversation, no cost, and no obligation to go any further. We will tell you honestly what is possible before you commit to anything.