Getting a mortgage is often more complex if you’re self-employed. It’s not because lenders avoid self-employed people, but because proving your income takes more effort. When you work for someone else, it’s easy to show payslips. But if you run your own business, your income may change each year, making it harder to assess.
Lenders want to see steady income and reliable records. They will check how long you’ve been working for yourself, how much you earn, and how your business is doing. Because of this, the self-employed mortgage criteria tend to be stricter than for salaried applicants.
If your income has gaps or large changes, it might raise questions. That’s why good record-keeping and preparation are so important. Knowing the full self-employed mortgage lending criteria can help you apply with confidence.
What is considered self-employed?
You are usually seen as self-employed if you own 20% to 25% or more of a business. This can include different types of work, and each one is looked at in a slightly different way by mortgage lenders.
Sole trader
As a sole trader, you run your own business and keep the profit after tax. Lenders will ask to see your SA302 forms and tax calculations. Most will want two or more years of accounts.
Partnership
If you’re in a partnership, you share the business with others. Lenders will need to know your share of the profits. SA302s and tax year overviews will help show this clearly.
Limited company
Company directors are usually paid through a mix of salary and dividends. Lenders often look at both. Some may also include money kept in the business. Ask your accountant to show this clearly in your accounts.
Freelancer or contractor
Freelancers and contractors often work on short jobs or projects. You may not have full accounts, so lenders might check your contract history, daily rate, or upcoming work. Showing steady income is important.
Evidence of your income
When it comes to applying for a mortgage, proof of income is a must. Lenders need to be confident that you can afford repayments, not just now, but long term. This is one of the most important parts of meeting the self-employed mortgage criteria in the UK.
Tax calculations and tax year overview
Most lenders will ask for your HMRC tax calculations and tax year overviews. These documents show how much you’ve earned and paid in tax. Usually, two or three years of records are needed.
Evidence of upcoming contracts
If you’re a contractor or freelancer, upcoming work can help strengthen your case. Letters of engagement or signed contracts showing your future income help prove that your earnings are ongoing.
Salary and dividend payments
If you own a limited company, lenders will review both your salary and any dividends you’ve taken. Having well-prepared company accounts will make this easier. In some cases, lenders may also look at money retained in the business.
What happens if I’ve got gaps in my work history?
Some self-employed people have breaks in their income, for example, due to illness, a career break, or gaps between contracts. This doesn’t always mean your application will be rejected.
Lenders will look at the overall pattern of your income. If you’ve returned to steady work or have strong earnings now, they may still consider you. It helps to give a clear explanation and provide documents that show your current income is stable.
Boost your mortgage chances
Meeting the self-employed mortgage criteria takes planning, but there are ways to improve your chances. Here are some helpful tips:
- Keep your records clean and up to date: Lenders need accurate income details. Submitting clear accounts shows that you’re financially organised.
- Maintain steady income: Try to avoid large ups and downs in earnings just before applying.
- Save for a bigger deposit: A higher deposit can reduce risk for the lender and improve your mortgage options.
- Reduce debts: Paying off credit cards or loans may improve your affordability score.
- Stay on top of your taxes: File your returns on time and keep track of your SA302s and overviews.
Following these steps can help you meet the self-employed mortgage lending criteria more easily and show lenders that you’re a responsible borrower.
Get your paperwork ready
Before you apply, it’s worth getting all your documents in order. The more prepared you are, the smoother your mortgage process will be.
What if I’ve not been self-employed for long?
Some lenders prefer two or more years of trading history, but others may accept less. If you’ve only been self-employed for one year, you may still qualify, especially if:
- You worked in the same industry before
- You have strong projected earnings
- Your current income is consistent
Having a good explanation and strong supporting documents will help. This is how getting a mortgage when self-employed requires a broader view of your financial background.
What happens if I’ve got gaps in my work history?
This can raise concerns, but it doesn’t mean you’ll be declined. Lenders usually want to know:
- Why did the gap happen
- How long did it last
- Whether your income has now returned to normal
If you’re honest and provide clear paperwork, lenders may still approve your application.
Compare mortgage deals
It’s important to look at different lenders before making a decision. Each one may use slightly different self-employed mortgage criteria in the UK, which means you could get a better offer by shopping around.
Also, lenders often apply their own rules when assessing your income. Some might count retained profits from your company, while others may only look at salary and dividends. Comparing deals gives you a better view of what’s possible based on your situation.
Getting familiar with interest rates if you’re self-employed can also help you plan ahead, as they often vary based on income history, deposit, and credit score.
Is it worth paying for a specialist broker or lender?
If you’re struggling to meet the usual lending rules, it might help to speak with a broker or specialist lender. They understand the unique challenges self-employed people face and may be more flexible in how they assess your income.
Here’s when a broker could be useful:
- You’ve been self-employed for less than two years
- You have gaps in your income
- You earn through a mix of salary, dividends, and retained profits
- A high street lender has turned you down
- Your income is project-based or seasonal
Specialist lenders often take a more detailed view of your income, which means you don’t have to fit into a strict checklist. This can make it easier to meet the self-employed mortgage lending criteria even if your earnings aren’t the same every month.
Working with a broker can also save time. They can help you prepare documents, match you with the right lender, and guide you through the application process. If you’re unsure where to start, it’s worth exploring your options.
Final thoughts
Getting a mortgage while self-employed takes more paperwork and planning, but it’s completely possible. Once you understand the self-employed mortgage criteria in the UK, you can prepare your documents and improve your chances of success.
The most important part is showing that your income is stable and well-documented. This helps lenders trust that you can keep up with repayments, even if your earnings come in different forms.
With the right preparation and support, you’ll be in a strong position to meet the full self-employed mortgage criteria and find the right deal for your needs.