Self Employed Mortgages Explained

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By Sarah Watts
Updated on Thursday 17 August 2023

A self employed woman at home on her laptop

It’s a common misconception that getting a mortgage when self-employed is on par with the Greek mythological labours of Hercules and you may think, if you work yourself, you have a better chance of winning the lottery than you do of getting on the property ladder!

However, whilst getting a self-employed mortgage is not quite as straightforward and simple as getting a mortgage when you’re an employed worker, it’s really not as complex and laboursome as you might think.

So sit back, relax and read our factual, myth-free, self-employed mortgage advice that tells you all you need to know,s including how to successfully apply for and get one.

How to get a mortgage when you are self-employed

Self-employed mortgage requirements are slightly different from employed mortgage requirements because when you’re employed, you will typically have a guaranteed monthly income which your employer can vouch for.

Whereas if you’re self-employed there is no concrete guarantee of a regular, monthly income, no one can vouch for it and your income can very often fluctuate.

To stand the very best chance of getting a self-employed mortgage application approved, you should:

  • Seek the professional services of a fully qualified, certified accountant to prepare your self-employed business accounts
  • Check your credit score and history is looking good and try to increase your credit score or remedy any patchy credit history before applying
  • Speak to a mortgage broker or adviser who has experience in successfully getting mortgages for self-employed workers
  • If you’re struggling to meet the eligibility criteria outlined below, consider applying to specialist self-employed mortgage lenders, applying for a Guarantor mortgage

Read more: Applying for a mortgage: a complete beginner’s guide

What do mortgage lenders look for when a self-employed person applies?

Proof of income and expenditure

Self-employed mortgage lenders will predominantly be concerned with comprehensive and reliable proof of income together with evidence that you can afford to pay a mortgage by carefully scrutinising your income and expenditure.

The majority of lenders will require:

  • Accountant-certified accounts*
  • A copy of HMRC form SA302 or a tax year overview for 2+ years
  • Contractors only will need to provide evidence of forthcoming contracts
  • Company directors only will need to provide evidence of dividends or retained profits
  • Your last six months’ bank statements**

* Most mortgage lenders prefer to see accounts that have been prepared by a fully qualified chartered accountant.

** To check affordability, a mortgage lender will want to analyse your bank statements to see how much you’re spending every month and what you’re spending your money on.

Proof of ID and address

A lender will want official evidence of your identity together with proof of address and will require sight of an original:

  • Passport or Photocard Driving Licence
  • Council Tax bill
  • Utility bill that no more than 3 months old

Deposit and credit score

Self-employed mortgage applications will stand a much greater chance of success if you have a large deposit (say, 20% of a property purchase price or more) and a good credit score and history.

You should save up as much of a deposit as you can before applying for a mortgage and check your credit history with all the UK’s main credit reference agencies: Experian, Equifax and TransUnion.

You can get a free multi-agency credit report from - simply tap the button below to sign up to a 30-day free trial:

Thoroughly study your credit report for any anomalies or outstanding debts you may have forgotten about. Remember, a lender will also be able to view all of this information and if you have a low score, a high credit utilisation and recently declined credit applications, they’ll consider you a credit risk and an unreliable borrower.

Read more: 14 reasons why your credit score is important

Self-employed mortgage rates

Mortgage rates for self-employed mortgages are normally the same as mortgage rates for employed workers’ mortgages.

However, if you do not fully meet all of the aforementioned eligibility criteria (i.e. have at least 2 years’ professionally audited accounts, a high enough income, low expenditure and a good credit score), then mortgages with higher rates of interest will usually be offered instead.

Without the assurances that all of the above information will provide to a lender, they will consider you a high-risk borrower and may decline your application.

Typical mortgage rates for most mortgages currently range from 1.2% to 3%.

Buying a house

The type of property you’re buying can influence a mortgage lender’s decision and they will usually be much more reluctant to offer you a mortgage if you’re buying an old, dilapidated or unusual property.

This is because a lender will want the assurance that should the worst happen and you default on your mortgage payments resulting in them repossessing your property, they will want a property that is easy to resell.

For example, a property that could be deemed difficult to sell is a flat above a shop or other type of commercial premises that could, for example, be susceptible to late-night disturbances or strong smells from hot food takeaways.

So buying a more mainstream [sellable] type of house that’s in good working order and in a popular residential area will increase your chances of mortgage success.

You may also be interested in: The stages of purchasing a house (UK)

How many years do you have to be self-employed to be eligible for a mortgage?

Ideally, you should have been self-employed for at least two to three years to be in with a good shot of having your mortgage application accepted.

The longer you’ve been self-employed and the more established and successful your business, the more chance you have of getting a mortgage.

How many years accounts?

  • Most lenders require at least two years’ worth of Accountant-certified accounts.
  • If you have less than two years’ accounts BUT have a large deposit, a good credit history, a decent income and a low credit utilisation, then you could still get a mortgage.
  • If you cannot provide two years’ audited accounts, do not have a large deposit or a good income and credit history, you’re more likely to have your mortgage application declined or, if you are offered a mortgage, the choice will be limited and the interest rates higher than normal.
  • If you have less than two years trading and/or accounts, you should speak to a mortgage adviser about your options and consider applying to specialist self-employed mortgage lenders.

How much can a self employed person borrow for a mortgage?

  • Generally, if you meet a mortgage lender’s eligibility criteria, you can borrow just as much as an employed applicant which is usually up to 4.5 times your yearly salary.
  • Albeit much rarer, some lenders will let you borrow more than 4.5 times your salary - sometimes as much as 5 or 6 times your income! However, eligibility for this large amount of borrowing is pretty rare and is only offered by a small minority of niche mortgage lenders to a handful of eligible applicants.

You might also want to read: What to know before applying for a £250,000 mortgage

How much deposit do I need for a self-employed house?

  • If you meet all of the self-employed mortgage rules, the majority of mainstream mortgage lenders usually require a deposit equal to 10-20% of the purchase price of the house you wish to buy.
  • However, if you fail to meet the eligibility rules (i.e. you don’t have at least two years’ certified accounts), then many lenders will usually require a larger deposit of 20% or more.

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