Self employed? Everything you need to know about getting a mortgage

Self-employed, and wondering if you can get a mortgage? ESPC Mortgages’ David Lauder looks at what’s possible, and the criteria involved.

Mortgages for the self-employed are becoming more readily available. The only difference to an employed applicant’s assessment is certain documents require evidence of income. However, the pandemic caused lenders to tighten their criteria, to assess the effect on self-employed people and how sustainable their business is. Different lenders will have different criteria, including required documents and your self-employed status, but the below gives a general overview of what to expect.

Sole Traders and Partnerships

Most lenders will want at least two years’ self-assessment tax returns showing level of income, along with an up-to-date tax summary overview. The golden figure they’ll refer to here is the Net Profit Figure, and lenders will, in most cases, work from the average of the last two years to determine your level of borrowing.

Limited Companies

This is assessed in a different way – lenders will still look at the last two years, but normally base figures on the client’s salary taken as a Director, coupled with dividends. Some lenders may consider salary with net profit instead, but you should seek mortgage advice to see what would be most suitable. Lenders will either use the last two years of self-assessment tax returns, or the last two years of business accounts, with a Chartered Accountant’s reference – the figures used must be no more than 18 months old.

Finally, a more regular feature of assessment for all self-employed applicants is that lenders will likely request the last three months of business bank statements to confirm strong trading, consistent with the figures provided.

To summarise, no case is the same, and different lenders will assess self-employed status in different ways. The experts at ESPC Mortgages can provide a useful guide to help you find the most suitable solution, tailored to your circumstances.

Get in touch with ESPC Mortgages

ESPC Mortgages is a team of independent mortgage advisers with a wealth of experience. Get in touch on fsenquiries@espc.com or 0131 253 2920.

The initial consultation with an ESPC Mortgages adviser is free and without obligation. Thereafter, ESPC Mortgages charges for mortgage advice are usually £395 (£345 for first-time buyers). YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOANS SECURED AGAINST IT.

The information contained within this website is subject to the UK regulatory regime and therefore restricted to consumers based in the UK.

The Financial Ombudsman Service is available to sort out individual complaints that clients and financial services businesses aren’t able to resolve themselves. To contact the Financial Ombudsman Service, please visit www.financial-ombudsman.org.uk.

ESPC (UK) Ltd is an Appointed Representative of Lyncombe Consultants Ltd which is authorised and regulated by the Financial Conduct Authority.