Self-Employed Mortgage Guide (UK)

Being self-employed shouldn’t stop you from getting a mortgage - but the process can be a bit more complex. Here’s everything you need to know about applying for a mortgage when you're self-employed, and how to improve your chances of approval.

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What Is a Self-Employed Mortgage?

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There’s no special "self-employed mortgage" - you’ll apply for the same mortgage products as anyone else. However, as a self-employed applicant, you’ll need to prove your income differently, and lenders may scrutinise your finances more closely.

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Who Counts as Self-Employed?

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You’re usually considered self-employed if you own more than 20–25% of a business and your income isn’t paid via PAYE. This includes:

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• Sole traders
• Limited company directors
• Partners in a business
• Freelancers and contractors

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How the Self-Employed Mortgage Process Works

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Here’s a step-by-step breakdown to help you understand what to expect:

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1. Prepare Your Financial Documents

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Lenders will want to see:

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• SA302s and Tax Year Overviews (from HMRC) – typically for the last 2–3 years
• Full business accounts – ideally signed off by a chartered accountant
• Bank statements – usually 3–6 months (personal and/or business)
• Proof of deposit
• ID and address verification

2. Speak to a Mortgage Broker

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Self-employed applications can be more complex, so using a specialist broker can:

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• Save time and stress
• Match you with lenders who understand self-employed income
• Present your finances in the best possible light

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3. Get a Decision in Principle (DIP)

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A DIP (also called an Agreement in Principle) shows how much you may be able to borrow. It’s based on:

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• Your declared income
• Credit history
• Deposit size
• Outgoings and debts

It’s useful to have a DIP in place before making an offer on a property.

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4. Find the Right Property

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Once you know your budget, you can start house hunting. Your broker or lender can guide you on affordability and loan-to-value (LTV) limits.

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5. Submit Your Full Mortgage Application

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Once you’ve found a property and had your offer accepted, your mortgage broker will help you:

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• Complete the application
• Submit your income and identity documents
• Provide any additional business information if required

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6. Lender Valuation and Underwriting

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The lender will:

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• Carry out a valuation of the property
• Assess your income and expenses
• Review your credit history and affordability

They may ask for clarification from your accountant or request additional documents.

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7. Receive Your Mortgage Offer

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If approved, the lender will issue a formal mortgage offer, typically valid for 3–6 months. Your solicitor will then handle the legal work.

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8. Exchange and Completion

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Once the legal side is complete and the mortgage funds are released, you'll exchange contracts and complete the purchase.

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Tips to Boost Your Mortgage Approval Chances

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• Use a chartered accountant to prepare your accounts
• File your tax returns on time
• Keep personal and business finances separate
• Maintain a good credit score
• Save a larger deposit – 10–20% or more improves your options
• Avoid large expenses or taking on new debt before applying

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How Is Self-Employed Income Assessed?

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It depends on your trading structure:

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• Sole traders - Based on average net profit over 2–3 years
• Limited company directors – Usually based on salary + dividends
• Some lenders may also consider retained profits
• Partnerships – Your share of net profit

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Common Self-Employed Mortgage Myths

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• "You need 3 years of accounts." Some lenders accept 1–2 years with strong figures.

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• "You can’t get a mortgage if you’re newly self-employed." It's harder, but not impossible - a broker can help.

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• "Rates are higher for self-employed people." Not always - if you meet the lender's criteria, you can access the same rates.

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Need Help with a Self-Employed Mortgage?

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We specialise in helping self-employed applicants get on the property ladder. Whether you’re a sole trader, contractor or company director, we’ll guide you through the process - clearly and confidently.

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Important: Your home may be repossessed if you do not keep up repayments on your mortgage.