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 » What is a Self Employed Mortgage?

What is a Self Employed Mortgage?

Ciarán Power

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

Table Of Contents

Introduction

For self-employed individuals, securing a mortgage requires a slightly different approach than for those in traditional employment. A Self Employed Mortgage is designed to accommodate the unique financial circumstances of those who work for themselves. This detailed guide will explore what a Self Employed Mortgage is, the nuances in application and approval processes, and what self-employed borrowers need to prepare for a successful mortgage application

Understanding Self Employed Mortgages

Self Employed Mortgages are not fundamentally different from standard mortgages but are customized for individuals whose income patterns may not be consistent due to the nature of self-employment. Lenders often require a comprehensive view of your financial history, including the stability and sustainability of your income. These mortgages cater to a wide range of self-employed professionals, from sole traders and freelancers to business owners.

Income Verification and Assessment

The crux of securing a Self Employed Mortgage lies in robust income verification:

  • Tax Returns (SA302 Forms): These forms provide a summary of income reported to HMRC, typically required for the last two or three years.
  • Accountant’s Statements: Certified accounts from an accountant can be crucial, especially for those operating their businesses.
  • Bank Statements: Your personal and business bank statements will be examined to assess your financial management.
  • Profit and Loss Statements: These documents can be critical in showing the profitability and financial health of your business.

Lenders generally look for consistency or an upward trend in income, as well as a stable trading history, usually for a minimum of two years.

Lender’s Criteria

Each lender has specific criteria when it comes to Self Employed Mortgages. This often includes a close evaluation of the business’s financial health, the borrower’s credit history, and the viability of maintaining consistent income levels. Lenders may require a higher deposit or offer a slightly higher interest rate compared to standard mortgages.

Summary

For self-employed individuals in the UK, obtaining a mortgage requires careful financial planning and preparation. Ensuring that all financial records are accurate, up-to-date, and readily available is key. Consulting with mortgage advisors (like ourselves!) who specialise in self-employed clients can provide valuable guidance and help in navigating this process. With the right preparation, self-employed individuals can successfully secure a mortgage tailored to their unique financial situation.

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.