How to get a mortgage when you are self-employed

If you’re wondering if you can get a mortgage when you are self-employed, you’ve come to the right place!

If you are self-employed it can be a challenge to secure a mortgage, but it can be done. You may just need to provide more information to your mortgage lender to prove that you will be able to make monthly repayments with a reliable income.

Read on to learn more about how to get a mortgage when you are self-employed.

What counts as self-employment when applying for a mortgage?

If you work alone as a sole trader, freelancer, independent business owner, or business contractor, you are likely to be self-employed. Getting a mortgage when self-employed can require extra effort but is certainly possible.

Can I get a self-employed mortgage?

‘Self-employed’ mortgages as such do not exist – you will be applying for the same type of mortgage as everyone else. However, if you apply for a mortgage with a partner, friend or family member who is not self-employed, your chances of success may be higher.

How to get a mortgage when you’re self-employed

Just like anyone else applying for a mortgage whether you’re a first time buyer or moving home, you will need to meet the lender’s eligibility criteria to show that you can afford repayments. Each lender will have their own specific criteria and level of flexibility, so you can be sure they will assess you individually and offer you a deal if they believe your income is sufficient.

As you do not have an employer or payslips to serve as a reference for your salary, you will need to provide more evidence and information than other applicants.

What are the self-employed mortgage requirements in the UK?

You will need to provide some documents such as a form of identification, bank details, and proof of current address.

In addition, self-employed applicants may need to provide evidence of profits, SA302 forms or a tax-overview for the past three years, evidence of a regular income and account statements dating back two years, or evidence of upcoming work or business. To ensure you can afford the monthly mortgage repayments, lenders may also ask about household bills, commuting costs, child care, credit card repayments, and loan repayments.

You can show lenders that your information is credible and that you are reliable by asking a professional, chartered accountant to prepare your accounts. It may be challenging to get a mortgage if your accounts have been open for less than a year, but providing evidence of regular work or future commissions may help your case.

Do I have to pay a higher mortgage rate if I am self-employed?

Being self-employed does not mean your mortgage rate will automatically be higher than if you were employed. Your mortgage rate is more likely to be calculated based on your credit rating and the size of your deposit. If you have a good credit rating and a large deposit, your chances of success will increase.

However, if you apply to a specialist lender that works with mortgages for self-employed individuals, the rates may be higher.

How to increase your chances of getting a mortgage when self-employed

Give yourself the best chance of success when applying for a mortgage by:

  • Saving as much as possible for a larger deposit
  • Making sure your credit report is up to date and correcting any inaccuracies
  • Registering yourself on the electoral roll

Being self-employed should not be a barrier to being accepted for a mortgage, and if you follow the advice above you will have a great chance of success.

Don’t hesitate to reach out to us if you have any questions on applying for a mortgage while self-employed – we would love to help alleviate your concerns!

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Here at Key Solutions we believe taking out a mortgage should be easy. Why shouldn’t it? So when people say buying a home or getting a mortgage is one of the most stressful things ever, we say, come and speak to us.

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