Being self-employed comes with many perks – flexibility, independence, and control over your career. However, when it comes to getting a mortgage, it can feel like the odds are stacked against you. Unlike salaried employees with a stable income, self-employed individuals must jump through a few extra hoops to prove their financial reliability to lenders.
But don’t worry, it’s entirely possible to secure a mortgage when you’re self-employed. With the right preparation and approach, you can improve your chances of approval and land a deal that suits your needs.
Here’s what you need to know:
Key Mortgage Requirements for the Self-Employed
Lenders assess self-employed applicants differently than traditional employees. Since your income may fluctuate, they want to see evidence of financial stability over time. To improve your chances of approval, you’ll typically need:
- Two to three years of tax returns (SA302 forms if you file through HMRC)
- Certified accounts prepared by an accountant (if applicable)
- Bank statements covering the last three to six months
- A healthy credit score to demonstrate reliability
- A deposit (typically at least 10%, but 15-20% can unlock better rates)
Some lenders may also request proof of upcoming contracts (for freelancers) or business plans showing income consistency.
Tips to Boost Your Mortgage Approval Chances
Getting a mortgage while self-employed requires extra preparation, but these steps can improve your chances:
- Maintain Accurate and Up-to-Date Financial Records
Keep well-documented accounts to show a clear and consistent income stream. Lenders prefer seeing steady earnings rather than significant fluctuations. - Minimise Business Expenses Where Possible
Many self-employed professionals deduct business expenses to reduce their taxable income. However, a lower declared income may impact your borrowing power. Consider balancing tax efficiency with mortgage eligibility. - Increase Your Deposit Size
The larger your deposit, the lower the perceived risk to lenders. A 15-20% deposit may help you secure better rates compared to a minimum 5-10% deposit. - Improve Your Credit Score
Check your credit score regularly and take steps to improve it if necessary. Pay off debts, avoid late payments, and limit new credit applications before applying for a mortgage. - Choose the Right Lender
Some lenders are more flexible with self-employed applicants than others. Consider working with a mortgage adviser who specialises in self-employed mortgages to find the best options.
The Role of a Mortgage Broker
A mortgage broker can be an invaluable resource for self-employed professionals. Since they have access to a wide range of lenders, they can help you find mortgage providers that cater specifically to self-employed individuals. Brokers can also assist with paperwork, negotiate rates, and increase your chances of securing a favourable mortgage.
Final Advice
While getting a mortgage as a self-employed professional may be more complex than for a salaried worker, it’s far from impossible. With careful financial planning, accurate documentation, and the right lender, you can successfully secure a mortgage that meets your needs.
If you need expert guidance, consider reaching out for personalised mortgage advice. Our experts can help navigate the process and improve your approval chances.
For more advice about your mortgage, give us a call at 020 8366 4400 or email enquiries@cedarhfs.co.uk.