Over 1,500 5-Star Reviews
Try Our Free Calculators
Follow us on Social Media
Over 1,000 5-Star Reviews
Try Our Free Calculators
Follow us on Social Media
Home » Services » Mortgage Services » Self Employed Mortgages » Types of Self Employed Income

Types of Self Employed Income

Ciarán Power

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

Table Of Contents

Introduction

For self-employed individuals looking to secure a mortgage, understanding the different types of income that lenders consider is crucial. This page will explore the various forms of self-employed income and how they are evaluated by mortgage lenders, providing insights to help you prepare for your application.

Sole Trader Income

As a sole trader, your income is derived from the profits of your business. Lenders will examine your net profit, typically over the last two or three years, to assess your earning stability. This is often verified through SA302 tax calculation forms and accompanying tax year overviews from HMRC.

Partnership Income

If you’re in a partnership, lenders will look at your share of the profits. It’s important to have clear documentation outlining your percentage share in the partnership and the corresponding income. Similar to sole traders, tax calculations and year overviews will play a significant role in how your income is assessed.

Limited Company Income

For directors of limited companies, lenders consider both salary and dividends as income. Some may also look into retained profits within the company. The assessment can be more complex, requiring detailed accounts prepared by a certified accountant, along with your personal tax returns.

Contractor and Freelancer Income

Contractors and freelancers may have varying income patterns. Lenders typically assess the average income, taking into account the duration of contracts and consistency of work. Invoices, contracts, and bank statements can be used to demonstrate your income history and predict future earnings.

Conclusion

Understanding how different types of self-employed income are assessed is key to a successful mortgage application. Clear and comprehensive financial records are crucial, regardless of the nature of your self-employment. It’s advisable to work with a mortgage advisor who can guide you on how best to present your income to potential lenders, enhancing your chances of a favorable mortgage approval.

Found what you're looking for?
Let's get you the outcome you deserve.
Call us, reach out on social media, or fill out our super simple online form for a free chat, no strings attached.

Our Services

Our core offerings are mortgages, specialist services, and protection. Click below to find out more!

Mortgage Services

For those looking to remortgage, purchase and everything in between, we have a solution tailored to you!

Specialist Services

These services differ from traditional mortgages, but are viable options for many homeowners across the UK!

Protection Services

It's so important to ensure you have adequate cover in the event of time off work, critical illness, or if you pass away.