Self-Employed Mortgage
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Self-Employed Mortgage (Part 1)
Aaron Tyson explains how the mortgage process works for the self-employed. Episode one of two, recorded in February 2026.
Is it hard to get a mortgage if you are self-employed?
It’s not as difficult as people might expect. The process itself is very similar to that for a PAYE employee, in terms of lenders needing to complete an income assessment and reviewing overall affordability. It’s just that the documentation required to support self-employed income is different.
Lenders can primarily review the most recent two years’ annual figures, either through finalised company accounts or personal tax returns, previously known as SA302s.
There were some restrictions for self-employed applicants during and after Covid, but that’s many years ago now. There were limits to maximum Loan to Value amounts for the self-employed, due to bounce-back loans – plus the additional complexity of assessing self-employed income at that time.
But now things have normalised, there’s no deviation from standard lending practice generally speaking for the self-employed today.
What type of mortgage can I get if I’m self-employed? Can I get a 95% mortgage if I’m self-employed?
The mortgages available are the same as for any other client – residential mortgages, remortgages, purchases, Buy to Let, commercial…. everything within the scope of mortgage lending is available to the self-employed as well as the employed.
In terms of 95% Loan to Value lending options, there are no restrictions for self-employed applicants specifically. Because the criteria and policy for each bank is different, not all lenders will offer the same borrowing capacity on a 95% LTV mortgage, but that’s just related to the banding of products rather than self-employed income.
How many years do you have to be self-employed to get a mortgage? Can I get a mortgage with only one year of self-employment?
The majority of lenders do want to see two years’ trading history for the self-employed.
It is possible to obtain a mortgage with one year of self-employment, though, as long as this is the first year of trading.
Only one high street lender has specific criteria to enable that, so it does narrow down the market. But because it’s a high street lender, there’s no significant shift in interest rates compared to the rest of the market.
Two years’ self-employment generally opens up the door to many more lenders and potentially slightly better value.
My most recent year’s earnings were less than my average. Will this affect my mortgage application?
It certainly can. One of the complexities of self-employed income is that your annual earnings are likely to fluctuate.
If we do have a lower figure in the most recent year, it tends to result in lower borrowing capacity. You may still reach a sufficient figure for mortgage lending capacity however. We would look at the figures and work out what’s possible pretty quickly.
How much can you borrow when self-employed? How many times my salary can I borrow for a mortgage if I’m self-employed?
There’s been significant changes to affordability and Loan to Income multipliers recently. We’re discussing this in February 2026 and over the last six to nine months we’ve seen lenders start to lend larger Loan to Income multiples. It’s now around 5.5 times the combined annual income for all applicants, especially for first time buyers.
That tends to be available up to 90% Loan to Value. When we go into the 95% Loan to Value territory, the Loan to Income is capped because it’s deemed slightly high-risk for lending.
Achieving these income multiple levels is less to do with being self-employed and more to do with whether you’re a first-time buyer, as certain lenders offer enhanced Loan to Income multiples if you’re buying your first home.
For many who are moving or remortgaging, that 5.5 times combined income facility could be available depending on your combined income. If it’s a lower amount in total, we may be looking at five times, or slightly less.
In addition, there are certain scenarios where we can achieve up to six times combined income. These are generally less mainstream and may involve a longer term fixed product or, with one lender, having a certain kind of bank account.
This is all due to FCA regulation easing. Self-employed applicants can benefit from this just as much as PAYE employees can.
What mortgage deposit do I need if I’m self-employed?
Deposit requirements are the same as for employed and self employed. It’s all to do with Loan to Value. We’ve recently seen one lender that will consider a 2% deposit – we’re seeing some change at the moment [information correct at the time of recording in February 2026].
But generally across the market, 5% is the minimum deposit. At 10% you’ll find better interest rates and borrowing limits – and a 90% mortgage is the most common for first-time buyers.
Can I use my self-employment grant as a deposit?
Occasionally, in certain types of self-employment and certain industries, grants are generated and they can form part of the overall income structure. It changes from lender to lender.
The longer the grant has been in existence and whether the funds have been earmarked for a certain purpose can affect whether a bank can accept it as a deposit.
The most common forms of deposit in the UK are from savings, investments and gifts – but we can look at grants in some scenarios.
What are self-certification mortgages, and do they still exist?
We probably get this question from prospective clients once a year. Self-certification mortgages were available prior to the 2007-08 financial crash. They were effectively a written confirmation of self-employed income, completed by prospective mortgage borrowers without any requirement to prove this income was actually being received.
The client just confirmed that they earned a certain amount for their mortgage application. The lack of control around the client’s true financial position created a much higher risk of mortgage defaults and repossessions, and as a result, self-certification mortgages were banned in 2009.
Today, there are robust controls around mortgage lending and clients’ financial positions – and for good reason. People don’t want to be borrowing more than they can afford, or setting themselves up for issues down the line.
We’re now required to meet a more strenuous underwriting process with income proof.
It’s surprising it was ever allowed in the first place – so these mortgages don’t exist any more.
How will I be assessed as a self-employed mortgage applicant?
There are two main methods for self-employed mortgage assessment. Firstly, we can utilise your personal tax returns, previously known as SA302s. That’s generally suitable for sole traders, directors of limited companies and contractors, and effectively confirms the amount of income that has been declared to HMRC.
For sole traders, we’re looking for the total profit received from self-employment – for one year if it’s your first year, or more commonly two years. We can potentially use the most recent year’s figure as income for mortgage affordability if it’s higher, in certain scenarios.
For directors of limited companies, we’ll be looking at the salary and dividends taken, as shown on the personal tax return. Generally it’s averaged out over the most recent two years or the utilising one year if this is the first year only.
We also see landlords providing tax documents, as these confirm the profit from land and property. Even an employed applicant who owns a Buy to Let in the background will be asked for this to confirm their income to support the management of background properties.
The second option may apply to a director of a limited company, a partner within a partnership, or someone with a percentage share within a limited company. With regards to mortgage lending criteria, someone is classed as self-employed if they own 30% or more of a limited company. It’s quite common for applicants to be a shareholding employee – but at the lower end of that ownership spectrum, you’re generally still classed as employed.
We may find that personal tax returns show a limited company director is taking a low income each tax year, either due to their lifestyle requirements or to manage tax levels. It’s reasonable – they don’t want or need to take more income and have a larger tax liability or may be adding more into their pension. In that scenario, we can look at the salary within the finalised company accounts plus their share of net profit.
It’s a way of looking at the health of the business overall to generate self-employed income. If the client hasn’t taken all the possible income, this can enhance affordability – because more income is being generated by the company than they’re taking. We need two years’ finalised accounts for that particular approach.
Lenders tend to either do their assessment on the finalised company accounts or on personal tax returns – it’s very rarely both.
Will IR35 affect my mortgage application?
IR35 came in because some companies were effectively employing full-time personnel on a contractor basis. The aim was to stop this and for companies to take them on as PAYE and pay their national insurance, tax and pension contributions.
IR35 can impact how a client works as a contractor or freelancer. Banks have a robust approach to contractor criteria and, broadly, acceptance of contractors is strong. It differs from bank to bank, as always.
The contract itself is important. We may just be able to use the day rate or an alternative method of remuneration. It all depends on the contract and the length of time contracting historically.
Fixed-term contracting is quite common, and we can use a contract straight away, as long as a client has previous experience in their field of expertise. Lenders are more comfortable with the likelihood of fixed-term contracts being renewed if you have a history in that area.
An applicant who has recently started contracting and is responsible for their own tax liability is unlikely to have personal tax returns yet. We can utilise the contract as it stands, and in future we can use either the personal tax returns or the contract itself. Those options can open additional doors, depending on each bank’s contractor criteria.
How will a lender calculate my self-employed mortgage earnings?
It can be complicated for clients to do this themselves – it’s easy to make mistakes, and each bank will have their own policy. They may require personal tax returns, company accounts or a contract.
If you’re a contractor on a day rate, you might expect that you can annualise that income over 52 weeks. In reality, banks actually base it on 46 to 48 weeks to account for holiday and to feather lending risk of gaps between contracting periods.
The documentation needed will depend specifically on the type of contractor you are and the wording of your contract plus our knowledge of how banks review self-employed applicants will help us advise a prospective client.
How do I prove my income? What documents do I need to apply for a mortgage if I’m self-employed?
The first step is to understand what can be done. One thing we haven’t covered so far is the Construction Industry Scheme (CIS). People under this scheme receive payslips weekly, but are still self-employed. In that scenario, we’d be looking at the payslips over a three to six month period as CIS income generally fluctuates depending on overtime or the project or projects being worked upon.
For a contractor, the contract itself is the key. If you’re a sole trader, it’s mainly your personal tax returns. If you’re the director of a limited company, a part-shareholder in a limited company, or you’re part of an LLP/partnership, we can utilise finalised company accounts.
It depends on which area of self-employment you’re in and what we’re aiming to achieve for the client – the documentation required is tailored to that.
We’ll be back with a part two episode, but any final thoughts before we return?
The only thing I would say is that this can be complex. We’ve covered a lot here – some things that self-employed clients may know well, and perhaps some things they didn’t.
Speaking to an experienced adviser can cut through to the core of what can be done. You really need to know how a lender will view you and what’s possible.
Key Takeaways:
- The process for getting a mortgage is very similar for self-employed applicants and PAYE employees, though the documentation required to support self-employed income is different.
- Lenders primarily review the most recent two years’ annual figures, typically requiring personal tax returns or finalised company accounts, although one year of trading history may be accepted if it is the first year of business.
- Self-employed applicants have access to the same types of mortgages, including 95% Loan to Value lending options, without specific restrictions, compared to employed clients.
- Loan to Income multiples have increased recently (as of February 2026) to around 5.5 times the combined annual income for all applicants, but having a lower earning figure in the most recent year can result in reduced borrowing capacity.
- Self-employed income is assessed using methods tailored to the applicant’s status – such as personal tax returns for sole traders and contractors, or a director’s salary plus their share of net profit from finalised company accounts for limited company directors.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
For specialist tax advice, please refer to an accountant or tax specialist.
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Self-Employed Mortgage (Part 2)
Aaron Tyson continues the conversation on mortgages for the self-employed. Episode two of two, recorded in February 2026.
Do self-employed people have to pay higher mortgage rates?
Not directly, no, as products aren’t usually tailored to specific client types. Self-employed applicants aren’t directly penalised on rates, because pricing is all to do with Loan to Value, as we covered in part one. The more deposit you’re putting down as a percentage of the value, the more security a lender has, and so the lower the interest rate able to be achieved..
At the same time, we may need to use specific mortgage criteria for a certain scenario. If a client is a contractor, for example, we may need to use a particular lender. Perhaps we need the income to be utilised in a specific way, or you only have one year of trading.
If we can find the right criteria on the high street, we’ll naturally be able to access low rates. But if we need a specific approach, based on the position, criteria needing to be utilised, credit history and overall case affordability, we may need a lender with less competitive rates. We always compare the options to find the most cost-effective approach for any client.
Can I get a joint mortgage as a self-employed worker?
Absolutely – it’s very common. We often arrange mortgages for two self-employed applicants or one who’s employed buying with someone who’s self-employed, both are absolutely acceptable.
I’ve recently gone from being employed to self-employed. How soon until I can get a mortgage?
This is often front of mind if someone is new to being self-employed. They want to understand how self-employed affordability works and what documents are needed.
Depending on the situation, you could get a mortgage straight away – or it could be a little while. Generally, we need at least a year’s personal tax returns to use self-employed income. That can be frustrating for people who are used to being employed and being able to provide PAYE payslips.
People also come to us as the director of a limited company, and want to use their payslips from that. We can’t use those though, because theoretically you could increase and decrease the figures freely within short spaces of time, not naturally being reflective of the true financial position of a self employed client. The key thing is the income figures or figure that’s sent to HMRC.
However, if you’ve moved to a self-employed contracting role, for example, we might be able to use your income straight away – especially if you’re working in a field where you have prior expertise.
Also, the Construction Industry Scheme (CIS) is payslip-based, but the tax responsibility is on the applicant. In that scenario we can work from three to six months of income. We need more than one payslip because the income can change considerably from week to week as we covered in part one.
For a sole trader or limited company director, it’s going to be one year minimum with that personal tax return. With other self-employed positions, primarily contractors, we may be able to look at it a bit sooner.
Can I get a guarantor mortgage if I’m self-employed?
Yes, this is no different than for the employed. It’s possible to add family members to a mortgage application depending on lender policy. You can get a mortgage for up to four people with affordability based on all four applicants.
You can also use Joint Borrower Sole Proprietor, where affordability is based on two incomes, but there’s only one owner of the property. These are the underlying elements of how a guarantor mortgage can work.
There are also specific guarantor products, but they’re quite rare. It’s mainly about meeting affordability requirements one way or another, and whether it’s packaged as a ‘guarantor’ mortgage in some capacity is actually secondary.
You’re able to access all of these methods while self-employed. If we need to utilise an element of lender criteria for self-employment, you won’t be restricted in accessing other areas of that lender’s policy.
It really depends on the situation, so we would help you look at what works best for your goals. Sometimes guarantor mortgages don’t make sense in the end for those involved, often due to a mixed position of ages, credit history, incomes and independent drivers for the future.
Can I use shared ownership if I’m self-employed?
Absolutely, shared ownership is assessed case-by-case and it’s property-specific.
To run affordability calculations and understand the options, we need to know what share of the property will be purchased. It could be 10%, 25%, 75% or any denomination as examples. Based on the share being purchased, we’ll know what mortgage levels we’re looking for.
We also then need to know what the rent would be for the share not being purchased, plus any service charges and ground rent. All of that together affects affordability and this is why shared ownership becomes property specific. Generally, there are also maximum incomes set by housing associations to be eligible for shared ownership as this is mainly an option to generate affordable housing options within the UK.
Can I get a Buy to Let mortgage if I’m self-employed?
Yes, there are no issues in obtaining Buy to Let mortgages or remortgages. Buy to Let borrowing is based on what the property generates in rental yield. We’ll work out whether your planned property meets lending calculations across the whole of market Buy to Let landscape..
We also have a property specific approach to lending in this field also – the lender’s interest is in the property as an investment vehicle, and whether the rent it generates meets mortgage lending internal rental benchmarks/ or rental calculations and as many landlords have experienced in recent years, higher interest rates restrict buy to let rental calculations and borrowing capacity. Earned income tends to be less important.
Some lenders have no minimum income requirements. You don’t need to be even working for a Buy to Let mortgage. In some scenarios, though, and particularly if you’re an existing landlord, there can be minimum income requirements of around £20,000 or £25,000.
Income can sometimes be used to bolster affordability as a whole, which is called ‘top slicing.’ Generally, we’re looking at the property itself as an investment as well as the overall financial position. It doesn’t change if you’re self-employed.
It’s important to mention that Buy to Lets can be owned either in personal name or via a limited company. If it’s purchased in a personal name, you personally own the property and the rental income is taxed as gross income, effectively another stream of PAYE income in the eyes of HMRC.
Buy to Let through a limited company generally gives more control over the way that the income is taken, plus managing tax liability and more freedoms in offsetting mortgage interest and expenses. What works for you will depend on your financial position and future plans.
But do note that a client would unlikely be able to purchase a Buy to Let to be held within an existing limited company. The business has to be what’s called a ‘special purpose vehicle’ (SPV). These are set up solely for the management of property and real estate activities. If you’ve got a limited company already, it’s likely to be in a completely different field. It’s vital that a Buy to Let company has one of four SIC codes with Companies House to be fit for purpose.
How does remortgaging work if I’m self-employed? Are there any differences?
As you’re seeing, criteria across the board are very expansive for both employed and self-employed applicants.
Remortgaging generally comes with enhanced affordability if we’re not looking to raise any additional funds and we could be reviewing remortgage options because the property’s gone up in value and so we can now access a better Loan to Value banding, and therefore lower rates. It’s easier to remortgage based on that scenario. Capital raising, debt consolidation, transfer of equity, Let to Buy, lease extensions, and many others highlight some of the reasons to require a remortgage in general.
Income and documentation is all still the same for remortgaging. We still need confirmation via those self-employed documents or your contract.
It may be that we’re remortgaging much later down the line and you now have a higher income, having been self-employed for longer and the business growing. That may allow us to work with additional lenders for lower rates and more scope across the market.
Will being self-employed with bad credit affect my mortgage deposit?
There’s no extra negative aspect around being self-employed with bad credit compared to being employed with bad credit. The credit position itself can impact the deposit required.
If you have a couple of credit blips, lenders may restrict the maximum Loan to Value. We may perhaps be aiming for a 95% loan to value mortgage, but lenders may restrict it to 90% upon decision in principle stage to protect their security. You might then need more deposit to move forward in this example, or perhaps a different lender may give us a different outcome based on their policy.
The more we understand about the credit position, the better we can advise you. Generally, the more severe and recent any adverse credit event, the more likely it is to impact potential lending options.
There are hundreds of banks in the mortgage market and some cater to these areas specifically. We can seek out options that will accept your position, which may require a lender that has more robust criteria around adverse credit.
How can I get a mortgage as the director of a limited company? What’s the process?
There are two main ways banks assess and utilise self-employed income for limited company directors. We can either use the salary and dividends taken on the most recent two years’ personal tax returns (previously known as SA302s) – or one year’s, if it’s the very first year of trading.
There’s also the option to use the director’s salary and share of net profit. That’s shown in the finalised company accounts, and we’d need to utilise the most recent two years accounts.
We generally need to see a minimum of two years’ accounts across self employed lending in general.. Banks see you as self-employed if you own more than 30% or 40% of a limited company. Anything less than that, you’re likely to still be assessed on payslips, even though you may still receive dividends.
Most self-employed applicants listening are likely to know which of those two routes would generate a higher mortgage, based on how a company has been operating and how they’ve taken income in recent years. It’s largely about whether you’ve taken the maximum possible income from the business or left it in place or made larger pension contributions to reduce the tax liability. That tends to push us down one avenue or the other in terms of maximums for affordability and lending.
What else can I do to help my chances of getting a mortgage when self-employed?
Self-employed applicants tend to have a strong relationship with their accountants, who file their tax returns and ensure tax liabilities are fair.
But based on good tax advice, the income we may find on tax returns could be lower than is truly reflective of the financial strength of their self employed operations, and clients can be surprised that they can’t borrow more. It’s all based on the information that HMRC has been given.
So, to improve your chances, it’s important to know that these are the figures lenders use for your affordability. Whilst good tax advice generally reflects lower income and thus lower taxation, this can impact your borrowing capacity.
Most mainstream lenders require a 5% minimum deposit, although one lender has introduced 2% if the credit file is in a healthy position. A self-employed client is able to obtain these mortgages in much the same way as any other client.
How can a mortgage broker help me with my self-employed mortgage application?
Across the two podcasts we’ve shown how self-employed income can be taken in different ways. We’re here to help you maximise the income itself, together with lender criteria, to meet your targets and future goals.
Every lender operates differently and that’s very true around self-employment policy. This is a big factor in what can and can’t be done. We have a deep understanding of how the mortgage market is operating, together with lending policy – which saves you time, energy, stress and money.
We’re also your first point of contact, from the beginning to the end of your mortgage journey – plus, we don’t charge any fees on mortgage cases.
Self-employed mortgages can be a complex area, and so talking to a broker that understands this across the market is so valuable. Lots of clients have attested to that in their reviews – so let’s have a chat about how we can help you.
Key Takeaways:
- Self-employed applicants are not directly penalised on mortgage rates, as pricing is tied to the Loan to Value (LTV); however, specific criteria like being a contractor or having limited trading history may require a lender with higher rates.
- Generally, sole traders and limited company directors need a minimum of one year’s personal tax returns to demonstrate self-employed income, but applicants in self-employed contracting or the Construction Industry Scheme (CIS) may be eligible to apply sooner.
- For limited company directors, lenders assess income using one of two methods: the salary and dividends from the most recent one or two years’ personal tax returns, or the director’s salary and share of net profit from the finalised company accounts.
- Buy to Let (BTL) mortgage borrowing is mainly determined by the rental yield the property generates, rather than the applicant’s earned income. If a BTL is purchased through a limited company, that business must be a Special Purpose Vehicle (SPV) with specific SIC codes.
- Affordability is calculated based on the income figures submitted to HMRC; therefore, aiming to minimise tax liability by reducing reported income can subsequently lower your potential borrowing capacity.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE MOST BUY TO LET MORTGAGES.
For specialist tax advice, please refer to an accountant or tax specialist.