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.