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Home » Services » Mortgage Services » Self Employed Mortgages » Self Employed Mortgage FAQs

Self Employed Mortgage FAQs

Ciarán Power

Last Updated: February 2nd, 2024 at 6:37 pm

Table Of Contents


Navigating a mortgage application can be particularly intricate for self-employed individuals. To aid in this process, this section addresses common basic and more complex questions about Self Employed Mortgages, offering clear and detailed answers.

The Basics

What qualifies as self-employed income for a mortgage?

Self-employed income typically includes profits from sole trading, shares of partnership profits, or salary and dividends from a limited company.

How long do I need to be self-employed to qualify for a mortgage?

Most lenders require at least two years of accounts or tax returns to consider a mortgage application.

Can I get a self-employed mortgage with one year of accounts?

It’s more challenging, and your choice of lenders may be restricted, but some lenders may accept applications with one year of accounts, especially if you have a strong income or credit history.

Are interest rates higher for self-employed mortgages?

Not necessarily; interest rates depend on the lender, your credit score, and the overall risk assessment.

Other FAQs

How does the fluctuation in self-employed income impact mortgage approval?

Lenders typically average your income over two to three years to mitigate the impact of fluctuations. They look for stability or an upward trend, which can positively influence your application. If your income varies significantly from year to year, be prepared to explain these fluctuations, such as by providing context for a particularly profitable or challenging year.

What specific financial documents are essential for self-employed mortgage applications?

Essential documents include SA302 tax calculation forms and tax year overviews from HMRC for the last two to three years, demonstrating your declared income. For limited company directors, this also extends to company accounts showing salary and dividends drawn. Additionally, bank statements (both personal and business) that reflect your income and expenditure patterns are crucial.

How can I strengthen my self-employed mortgage application?

To strengthen your application, ensure your accounts are up-to-date and prepared by a qualified accountant. Boosting your credit score, reducing existing debts, and accumulating a larger deposit can also enhance your application. Demonstrating a consistent or increasing income and having a healthy business with solid projections will further reassure lenders.

What challenges might I face in proving my income for a mortgage?

Challenges include presenting a clear and consistent income trail if your business has multiple income streams or has experienced significant fluctuations. Recent changes in business structure or profitability can also complicate the income verification process. Lenders may scrutinize unexplained financial anomalies or recent changes in your business’s profitability more closely.

Are there specialised mortgage brokers for self-employed individuals?

Yes, some mortgage brokers specialise in working with self-employed clients. These brokers understand the complexities of self-employed finances and can provide tailored advice. They can help identify lenders who are more receptive to self-employed applicants and assist in presenting your financial information effectively to maximize your chances of approval. Here at Green, we pride ourselves on our expertise and ability to find a solution for you, no matter how difficult it may seem.

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