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Navigating Mortgages When You're Self-Employed

How many years accounts do I need?

While it’s true that for many of the mainstream lenders to show 2 consistent years of figures while unlock the combination of affordability and interest rate there are many combinations of that can be used for affordability, whether you’d prefer to use your latest years figures that show a growing business, or retained profit as a company director. There are plenty of options to open doors to home ownership for the self employed.

Company Directors: Leveraging Your Profits

As a director of your own limited company, lenders will typically assess your income based on the salary you draw and the dividends you receive. Some lenders may also consider your share of the company's net profit. This can be particularly beneficial if you retain significant profits within the business for growth. Ensuring your company accounts are up-to-date and professionally prepared is crucial. Mortgages can be used for purchasing a primary residence, buy-to-let investments, or remortgaging existing properties.

Sole Trader Mortgages

For sole traders, your mortgage application will be primarily assessed on your net profit as declared to HMRC over the past two to three years. Lenders will look for consistent or growing profitability. Keeping meticulous records of your income and expenditure, and having your tax returns (SA302s) and tax year overviews readily available, will significantly streamline the process. These mortgages can be used for first-time home purchases, moving home, or raising capital for business or personal use.

CIS Workers

If you work under the Construction Industry Scheme (CIS), lenders will often assess your income based on your gross earnings before tax and other deductions. This can be advantageous as it reflects your total earning potential. You'll typically need to provide your CIS payslips and corresponding bank statements. Mortgages for CIS workers can be used for buying a home, remortgaging to a better deal, or investing in property.

Contractor Mortgages

Contractors, whether operating through a limited company or an umbrella company, can often benefit from specialist contractor mortgages. Many lenders will assess your affordability based on your daily or hourly contract rate, annualised to provide an overall income figure. This can be a more straightforward approach than relying on company accounts or salary and dividends, especially for those with shorter trading histories but strong contract earnings. These mortgages are suitable for purchasing homes, buy-to-let properties, and remortgaging.

Remortgaging for the Self-Employed: Unlocking Better Deals or Equity

Regardless of your self-employed structure (director, sole trader, CIS, or contractor), remortgaging can be a valuable tool. You might want to secure a more favourable interest rate, reduce your monthly payments, or release equity built up in your property. Lenders will reassess your income and business performance, so having your financial documentation in order remains key. This can free up capital for home improvements, debt consolidation, or further investment.

Self Employed