We Specialise In Self-Employed Mortgages
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Boost Your Borrowing
Borrow up to 6 times your income with only one year's accounts. We have access to specialist income boosting lenders not available to the general public.
Searching For a Solution?
No matter if you are a limited company director, sole trader, partner, freelancer, landlord; we have the right mortgage solution for you.
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Keep Money In The Bank
You only need a 5% deposit (or equity if a remortgage). This will allow you keep back money for home improvements, debt consolidation, future purchases, etc.
Getting a mortgage as a self-employed person:
It is often harder to get a mortgage as a self-employed person as it can be difficult to prove your income and it is deemed a more risky investment by lenders. Normally lenders will only be able to accept applicants who have been self-employed for 2 years and have at least 2 years of accounts.
Lenders will usually average your income over 2 years to work out how much you can borrow, however some lenders will use the latest year figures only. Additionally, certain lenders can use an accountant's projection.
Types of self-employed persons
Sole trader - Lenders will use your tax calculation to determine affordability
Limited company owner/director - Lenders will take into a account a number of factors when determining affordability:
Salary
Dividends
Net and gross profit
Percentage ownership of the business
Documents required:
1, 2 or 3 years of accounts
1, 2 or 3 years of tax calculations (SA302s) and tax year overviews
Contractors
Lenders will consider contract value, time left on your current contract, and future / previous contracts.
Or, they will use your day rate multiplied by five days a week, multiplied by the number of weeks worked (usually this is 48 weeks).
Documents required:
A current and previous contract (including day rate), or a HMRC tax calculation, or financial accounts.
Important tips for every self-employed person
Mortgage lenders normally do not have skilled staff to understand financial accounts and simply work on tax calculations instead. Sometimes this is not enough. Often it is necessary to use retained profits/ average figures over 2 years / only 1 years' accounts.
The following requires more understanding than lenders generally possess:
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Dividends.
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Directors loans.
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Directors salaries.
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Change from partnership to limited company.
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Bad debts.
Accounts can be simple or complex, but they always need a degree of experience and understanding. We have spent over 25 years helping the self employed borrow more than they would elsewhere.
We want to hear your story and so do our lenders.
What if I have already had a mortgage application rejected?
Due to FCA regulation, lenders nowadays have adopted much stricter applicant criteria. This means it is harder for self employed people to be successful with their mortgage applications. Especially if you have written off profit through higher expenses, and ultimately declared less income. Therefore, it is becoming more frequent that self employed mortgage applicants are being rejected.
However, if you have been rejected already, there are still many opportunities available to you. Our specialist mortgage advisors have access to lenders and products that are more flexible for self employed people.
What will I need while making my mortgage application?
Lenders normally require you to supply the following documentation or demonstrate the following:
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Financial accounts of the last two/three years.
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Good credit history.
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Proof of regular work.
However, if there are difficulties in attaining all of these, it is important to seek specialist mortgage advice. We have lenders whose underwriters understand Accounts, know how to read them and will offer competitive rates.
Maximise Your Mortgage
Unlike most mortgage lenders, our team understands financial accounts.
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Latest Year Figures
Retained Profit
Profit Before Tax
If there is an upward trend in income across the last few years, it makes sense to your latest year only (instead of averaging).
If you decide to keep money in the business, this can still be used in the affordability calculation.
Our lenders will consider using net profit before tax, instead of net profit after tax.
How to maximise borrowings as a self-employed person
Financial projections
If you have expecting to have a highly profitable year, it is possible to use a predicted figure in your affordability calculation.
You will need to get a letter from your accountant or draft accounts to evidence your projected income. You will need to be most of year through the year - you couldn’t get a projection based on the first few months. Additionally, you will need to provide a credible explanation for the increase in profit.
For instance, if you earned the following:
2023 - £100,000 (projected income)
2022 - £50,000
2021 - £30,000
Most lenders will take an average or lowest figure of 2022 and 2021, which means you can borrow based on an income £40,000 or £30,000. However, if you can get an accountant’s projection, you borrow based on the latest year and the projection (£75,000). This will allow you to borrow significantly more than before.
Using the latest year figure
Instead of averaging income over the latest three years, our lenders just work off the latest year of income. As lenders consider a self employed person higher risk than an employed person, they need to see a consistent track record of earnings. Depending on the lender, this is often 2 or 3 years evidence of income. In their affordability calculation, an average will be taken or they will use the year with the lowest income.
For instance, if you earned the following:
2023 - £40,000
2022 - £30,000
2021 - £20,000
Normally a lender will use £20,000 (average) or £10,000 (lowest figure) when calculating how much you can borrow. However, there are lenders that will just consider the £40,000 and disregard the two previous years.
This is particularly useful when a person is trying to maximise borrowings and there is an upwards trend in income.
There is no limit to this. In theory, you can make a loss in previous years and a have a profitable latest year, and only use the latest year figure.
Self-employed income tends to fluctuate so it useful to have lenders that will just use the latest year figure, and to have lenders that will take an average if the latest year is poor.
Use retained profits in your business
If you decided to keep profits in your business, some lenders will be able use this in a mortgage application. This will help to boost your affordability and maximise your borrowing.
Often mortgage lenders will only consider what is on your tax return. For limited company owners, this would be your salary plus dividends. However, this doesn't make sense if you are retaining a large proportion of profit.
For instance, if your business made a net profit of £150,000 last year, however you only decide to withdraw £75,000 of this, it is still possible to find a lender to consider a mortgage of £750,000 (£150,000 X 5).
Utilise your share of net profit before tax
When calculating affordability for an employed person, a lender will use their gross salary figure, not the net figure (after tax). However, when calculating affordability for a self-employed person, most lenders will use your share of net profit after tax. This has significant impact on how much you can borrow for a self-employed person.
Not all lenders will do this, a select few will consider your share of net profit before when determining how much you can borrow. Therefore, if your need to maximise your borrowing to buy your dream house, we link you with the right lender.