Self-employed mortgages

A self-employed mortgage is not a separate product. It is a normal residential mortgage where the lender checks income through business accounts, HMRC tax calculations or contracts rather than payslips. The rates, terms and deposit rules sit within the same ranges as employed borrowers, but the evidence and the way income is calculated differ.

Lenders usually class someone as self-employed when they own a meaningful share of the business that pays them, or when they work for themselves and file a Self Assessment return. The exact threshold varies by lender, so the same person can be treated as employed by one lender and self-employed by another.

Because income is proven differently, the main questions in a self-employed application are which figures the lender uses, how many years of figures it wants and whether recent changes in profit are explained. Each of those is covered below.

Lenders group self-employed applicants into four broad types: sole traders, partners in a partnership or LLP, directors who own a share of a limited company, and contractors paid through their own company or an umbrella firm. Each type is assessed on different figures, so the category affects how much income a lender will count.

Sole traders are usually assessed on net profit from the Self Assessment return. Partners are assessed on their share of the partnership profit. Directors are commonly assessed on salary plus dividends, and some lenders will use salary plus the director's share of net profit instead, which can help when profit has been kept in the company.

Company directors have a dedicated page covering salary, dividends and retained profit in more depth: see limited company director mortgages. Freelancers, gig workers and people with several part-time businesses are normally treated as sole traders unless they trade through a company, in which case the director rules apply.

Lenders work out self-employed income from the figures on tax calculations and accounts, not from turnover. Most take net profit for sole traders, a profit share for partners and salary plus dividends for directors, then either average the last two years or use the latest year if it is lower, depending on the lender's own criteria.

Where profit is rising, some lenders will use the latest year on its own, while others still average the last two years. Where profit is falling, most lenders use the lower, latest figure and may ask for an explanation. This is why the same set of accounts can produce different borrowing figures at different lenders.

Other income can be added on top of business income if it is evidenced, such as rental income, a part-time employed salary or regular investment income. Lenders treat each source under its own rules, so a mixed income profile is usually assessed piece by piece rather than as a single total.

Most lenders ask for two to three years of accounts or tax calculations from self-employed applicants, according to MoneyHelper, How to apply for a mortgage, accessed 26 Oct 2026. A smaller group of lenders will consider one full year of figures, usually where the applicant stayed in the same line of work before going self-employed.

A two-year history lets the lender see a trend and average the figures. Three years can help where income is uneven. Applicants with less history are not automatically refused, but the choice of lenders narrows and the lender is more likely to ask for extra evidence such as contracts, projections or an accountant's reference.

Newer businesses with one year of accounts are usually considered only where the applicant moved from employment in the same line of work, and lenders that accept one year often ask for an accountant's projection as well. Time spent as a sole trader before moving to a limited company in the same trade is often counted as continuous history.

The core documents are HMRC tax calculations (SA302s) with matching tax year overviews, plus business accounts where the lender asks for them. HMRC lets you download SA302s for the last four tax years once a return has been filed, according to GOV.UK, Get your SA302 tax calculation, accessed 26 Oct 2026. Bank statements, ID and deposit evidence complete the pack.

Many lenders accept an accountant's certificate or reference in place of full accounts, and some insist that the accountant holds a recognised qualification. Business bank statements may be requested to show that trading income matches the declared figures. Directors may also be asked for company accounts and dividend vouchers.

Keeping returns filed on time makes the process quicker, because the most recent year cannot be used until the return is submitted and HMRC has calculated the tax. Any tax still owing to HMRC should be explained, as several lenders treat overdue tax as a reason to pause the application.

Contractors are often assessed on their contract rate rather than their accounts. A lender using this method annualises the day rate, commonly by multiplying it by five days and a set number of working weeks, then applies its normal income multiple. The exact formula and the minimum contract history required vary by lender.

This approach can help contractors whose accounts show low profit because they pay themselves through a company, and it can help people who have only recently switched from permanent roles. Lenders still check gaps between contracts, the remaining term on the current contract and whether the work is in the same field as before.

Construction workers paid under the Construction Industry Scheme and IT contractors working inside or outside IR35 are assessed under variations of these rules. The full picture, including umbrella company pay and fixed-term contracts, is on the page about mortgages for contractors.

Self-employed borrowers can usually borrow the same income multiple as employed borrowers once their income is accepted. The difference lies in which income figure is used, so the realistic borrowing range depends on whether the lender averages two years, uses the latest year, or counts retained profit or a day rate.

Affordability checks then look at outgoings, credit commitments, dependants and the stress-tested monthly payment. Under the Bank of England's mortgage market rules, lenders also limit how many loans they make at high income multiples, which affects borrowers of every employment type rather than the self-employed alone.

Any early borrowing figure is an estimate, because the lender's own affordability model and its choice of income figure set the final amount.

Remortgaging when self-employed follows the same income checks as a purchase, because a new lender has to reassess affordability from the latest figures. A product transfer with the existing lender often needs no new income evidence, which can suit borrowers whose profit has dipped since the original mortgage was taken out.

A switch to a new lender is more often considered where income has grown, where a different income reading gives more borrowing, or where the borrower wants to raise money for home improvements. In each case the lender will want recent tax calculations, so timing a remortgage around the filing of a strong year can matter.

A product transfer keeps the same lender and usually skips a new income check, while a full remortgage to a new lender repeats it. A borrower who moved from employment to self-employment during a fixed rate is judged by a new lender on the self-employed history only.

Complex income means income that does not fit one simple box, such as several businesses, a mix of employed and self-employed work, large dividends or seasonal earnings. Specialist lenders and some building societies assess these cases manually, reading each source on its own merits instead of applying a single automated rule.

Falling profits are one of the most common reasons for a lower offer, because many lenders use the latest year when it is lower. A clear explanation, such as a one-off cost or a planned investment, can help a manual underwriter, but it does not mean the higher figure will be used. High-street lenders tend to apply automated rules to the latest figures, while specialist lenders and building societies are more likely to underwrite falling profit by hand.

A past credit problem does not rule out a self-employed mortgage, although it narrows the choice of lenders and can affect the rate offered. Missed payments, defaults and county court judgments are read by age and size, and recent issues weigh more heavily than older, settled ones.

Applying for a self-employed mortgage usually runs in five steps: gather tax calculations and accounts, check credit files, get an agreement in principle, submit the full application with documents, and wait for valuation and underwriting. Self-employed cases often take longer at underwriting because income is checked by hand.

Brokers who handle self-employed cases know which lenders read retained profit, day rates or one-year accounts, which can matter more here than in employed cases. What to look for in a broker for this kind of case is set out on the page for self-employed mortgage brokers.

Lender criteria come before headline pricing in a self-employed case, because a lender that will not accept the income evidence cannot offer its rate. Having the required tax calculations, tax year overviews and recent bank statements ready before the agreement in principle also shortens the underwriting stage.