Is it hard to get a mortgage as self employed?

No, it isn’t necessarily harder to get a mortgage as self-employed, but the process is different and requires more paperwork.

Lenders just want to be sure you have a steady and reliable income to afford the monthly payments. Instead of showing payslips from an employer, you have to prove your income in other ways.

How Lenders View Your Income

Lenders will want to see a track record of your earnings. This usually means you need:

• Two or more years of accounts: Most lenders ask for two to three years of trading history to see that your income is stable. It can be more difficult, but not impossible, to get a mortgage with only one year of accounts.

What You’ll Need to Provide

The key difference is the documents you need to gather. Be prepared to show:

• Tax Documents: Your SA302 forms or “Tax Year Overviews” from HMRC for the last two to three years. These officially show your declared earnings.
• Certified Accounts: Your business accounts, ideally prepared by a certified accountant.
• Bank Statements: Usually three to six months of both your personal and business bank statements.
• Standard ID: Proof of identity (like a passport or driving licence) and proof of address (like a council tax or utility bill).

How your income is calculated depends on your business type:

• Sole Trader: Lenders will look at your net profit.
• Limited Company: Lenders will look at your salary and the dividends you take. Some may also consider your retained profits.
• Contractor: Lenders may look at your contracts or calculate your annual income based on your day rate.

Tips for a Stronger Application

1. Save a Good Deposit: A larger deposit always helps and shows you are financially responsible.
2. Check Your Credit Score: Make sure your credit history is in good shape. Pay off any debts you can and ensure you’re on the electoral roll.
3. Use an Accountant: Having your accounts certified by an accountant makes them look more professional and reliable to lenders.
4. Speak to a Broker: A good mortgage broker, especially one who specialises in self-employed applications, will know which lenders are most likely to approve your application.