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Self-employed mortgages

Self-employed mortgages

If you’re self-employed or run your own business, it shouldn’t stop you from being able to get a mortgage – but there are some things you’ll need to know beforehand. Read our guide to find out how you can get the right mortgage for you. 

Tobi Owens
From the Mortgages team
minute read
posted 6 JANUARY 2020

Can I get a mortgage if I’m self-employed?

You can get a mortgage if you’re self-employed but you’ll have to go through affordability and credit assessment checks, the same as any other borrower.

Lending criteria can vary among lenders – some calculate the amount you can borrow based on several years of income, whereas others set it based on your previous year of trading. So you'll have a better chance of being accepted for a mortgage if you can wait until your business has existed for a couple of years before you apply.

Do self-certification mortgages still exist?

Self-certification mortgages were banned in 2011 by the Financial Conduct Authority (FCA). This stopped people applying for mortgages where they didn’t have to prove their income. 

What will I need to apply for a mortgage if I’m self-employed?

If you’re self-employed, you’ll need to provide evidence to prove that you can repay the mortgage. These include: 

  • A large deposit: if you have a large deposit, you’re more likely to be eligible for a mortgage with competitive interest rates. You should aim for at least a 10% deposit.
  • A good credit history:  this shows lenders that you can manage debt effectively, by not going over your credit limit and keeping up with your repayments. The better your credit history, the more likely you’ll be approved.
  • Proof of income:  you’ll typically need to show documents that demonstrate a steady income in the past two years(sometimes three). It can be a tax return, a profit and loss statement, or anything else that shows you have regular money coming in.
  • Accounts prepared by a chartered accountant: an accountant can help you organise your accounts and taxes to help prove your reliability.
  • Savings:  these can support your case by showing that you can manage your money effectively, even if your income fluctuates throughout the year.  

What to do if your circumstances change once you’ve got a mortgage?

If for any reason your financial situation changes during the term of your mortgage you should tell your lender. For example, if you get paid employment or you lose clients and your income suffers as a result. It’s important to be open and upfront with your lender about your ability to keep up with your mortgage repayments, than to fall into arrears without alerting them first.

Your lender may be able to offer you a payment holiday for a few months. However, you’ll need to start paying again at some point, and extra interest may be added on to your debt as a result of the holiday period.

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