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Self-Employed Mortgages

What is a mortgage for self-employed?

Specific self-employed mortgages do not exist though sometimes if you are self-employed, a contractor or a director of a limited company it might feel like Lenders don’t understand your situation, but New Start Financial Services can help.

The self-employed make up 13%* (as per March 2022 ONS data) of the employment market, playing an important role in driving economic growth, vital during these times of uncertainty, as we continue our journey through Brexit. But these go-getters are often wrongly rejected by mainstream lenders when they are seeking a mortgage.

Regardless of whether you are a sole trader, you have a partnership or a limited company, you are still eligible for a mortgage – though some Lenders are more flexible than others.

Prior to the Credit crunch in 2008 self-certification ‘self cert’ was possible which meant there was no need to prove income. This option is no longer available though different Lenders use different means to assess your income.
As a sole trader you will be assessed on net income and as a director normally salary and dividends.

Can I apply for ‘self-employed mortgage’ when a sole trader?

Most mortgage lenders will look at the income received over the last two or three tax years and average over two years, though some lenders will assess on your latest year. You will have access to an SA 302 which confirms what has been submitted to HM revenue. Your lender may request it alongside your accounts or on it’s own.

Can I apply for mortgage for self-employed when in a partnership?

When looking at your income, mortgage lenders will look at each partner’s share of the profit, again in most cases an average of the last two years but latest year assessment is possible.

Can I apply for mortgage for self-employed when having a limited company?

As a limited company director most lenders will assess on your salary and dividend income, again normally an average of the last two years, though again some lenders will assess on the latest year. Some lenders though will assess on salary and net profit which is useful if you retain profits in your company and do not draw out all of your possible income.

What about self-employed mortgage when I’m a contractor?

Some lenders will take your day rate and equate the gross figure to a yearly salary and will not look at your accounts or tax return. The norm is that you would need to have been contracting for at least a year but depending on your experience and history it is possible for this to be considerably reduced.

Can I apply for self-employed mortgages with less than two years trading?

Although many lenders prefer at least two years trading accounts, there are some lenders that have mortgage products designed for self-employed customers in mind with less than two years trading. Some would even consider a one full year of trading account information or an SA302 and corresponding Tax Year Overview form. We can help you with this.

How do I apply for self-employed mortgages?

Being self-employed means a more challenging process and you do not want to apply and be declined as this will have a negative effect on your score.

Talk to us for an initial chat, and we can talk through the most appropriate options for you. Remember no initial fees.

Why use a specialised broker?

Finding the right mortgage supplier when you are self-employed, a contractor or a director of a company can sometimes seem an impossible task. The regulator effectively banned self-certification mortgages following the 2008 crash, making the route to getting a mortgage much more difficult. Ideally, you will have been self-employed for at least three years with consistent income. However, as a self-employed person you may have had fluctuating income or have been trading only for a year (or less). Whatever the financial complication, a specialist broker will take time to understand your complex and specific requirements and will be able to match you to the right lender for your particular circumstances.

Stuart Dibley Specialist
Mortgage Adviser

To find out exactly what you're eligible for and at what rates please give me a call on 03456 123835 or fill out a quick enquiry form here.