Self-employed mortgages

A good mortgage deal when you are self-employed can be hard work to secure. Mortgage321 will do that legwork for you, whilst you focus on running your business.

Being self-employed brings many rewards in life but not when it comes to buying or remortgaging property, and the confusion surrounding self-employed mortgages affects thousands of applicants each year. While there are a handful of additional obstacles to consider along the path to success, it is usually still possible to get a mortgage. Here’s all you need to know.

Do many lenders offer self-employed mortgages

The good news is that most banks and mortgage lenders Mortgage321 work with will allow self-employed workers to borrow money. This means that, despite the perceived lack of options, we should have no problems finding a lender – as long as you meet the criteria. Remember, though, that all lenders have their unique policies. 

Securing a mortgage with one years accounts

As a self-employed business owner applying for a mortgage, you will need to prove your earnings. If you only have one year of accounts you are going to need to prove that your business is viable, and your income is going to be stable enough to afford to pay the mortgage back.

Many lenders will not provide a mortgage for a self-employed applicant with only one year of accounts, however, there are specialist lenders available via Mortgage321 who are willing to lend to you and your circumstances. Finding those lenders and securing a decent mortgage deal is no easy mission; you should seek the assistance of a Mortgage321 expert mortgage adviser who has helped copious numbers of clients in similar situations.

Securing a mortgage as a director

It is commonplace for directors to pay themselves a salary that is normally below the tax threshold, retain more profit in their businesses and pay themselves a dividend. Tax on dividends is lower than on income, so it makes sense for directors to do so, to maximise their income levels.

Many lenders will only consider the applicant’s personal salary income, which can be significantly lower than their real take-home amount. This may limit the amount the lender is willing to lend you, despite being the director of a profitable business.


Whether you are employed or self-employed, mortgage lenders need you to prove your income.

This is relatively straightforward as an employed worker as you have a contracted salary amount, proved by your regular monthly payslips. If your payslips do not reflect your whole income as a director of a business, i.e. your dividend payments are not shown, then some lenders may consider you to be a higher risk borrower. This could lead to non-acceptance or a less ideal interest rate.

As a specialist mortgage broker, Mortgage321 can assist you in securing a mortgage based on a combination of salary, dividends and retained Company profits, using lenders with a flexible approach.

 

Securing a mortgage as a sole trader or business partnership

Securing a good mortgage deal when you are a self-employed sole trader or part of a partnership can be particularly difficult, but it certainly isn’t impossible.

As a self-employed business owner applying for a mortgage, you will need to prove your earnings with either HMRC tax calulation and tax overview documents or full accounts. If you have not been trading long or have recently had a entity change, you may need to also prove that your business is viable, and that your income is going to be stable enough to afford to pay back the mortgage.

Some lenders will provide a mortgage for a self-employed applicant with only two years of accounts, however, there are also specialist lenders available who have less restrictions than high street lenders who specialise in self-employed mortgage applicants.

Finding those specialist lenders yourself and securing a decent mortgage deal is no easy mission and can be very time consuming, but through Mortgage321 we'll so all the hard work for you.