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Can I get a mortgage if I’m a self-employed tradesperson?

One of the biggest concerns for people starting their own business is whether they can get a mortgage if they're self-employed. This post outlines everything you need to know about mortgages for self-employed tradespeople.

How to get a mortgage if you’re self-employed

Getting a mortgage if you’re self-employed follows a slightly different process to that of an employed individual on PAYE.

There may be a few more hoops to jump through, but it’s absolutely possible to get a mortgage if you’re a self-employed tradesperson.

Here’s what you’ll need to provide as proof of income:

  • Two to three years’ accounts.
  • SA302 forms or a tax year overview (from HMRC) for the past two to three years.
  • If you’re a contractor, you’ll need to supply evidence of upcoming contracts.
  • If you’re a company director, you’ll need to supply evidence of dividend payments or retained profits.

You will also need to provide:

  • Your passport.
  • Your driving licence.
  • Your council tax bill.
  • Utility bills dated within three months.
  • Six months’ worth of salary-fed bank statements.

What is an SA302?

An SA302 is an overview of the income that you’ve reported to HMRC. As a self-employed individual, you will have registered with HMRC, therefore you’ll have access to this document following the end of the tax year. The SA302 lets mortgage lenders check your income and helps to decide your creditworthiness.

self-employed tradesperson mortgage

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What are the rules for self-employed mortgages?

There are certain rules and criteria for self-employed mortgages around how much you can borrow, the type of mortgage you can get, and the proof of income needed. We’ll cover each of these, below.

How much can I borrow on a mortgage if I’m self-employed?

If you’re self-employed, it’s normally possible to borrow 4.5 times your annual income. Of course, you’ll need to meet the mortgage lender’s criteria in order for your application to be successful.

One of our top tips for self-employed mortgages is to check your credit score before you make your application. Make sure there aren’t any entries that could impact your credit rating, as this could affect the rates and deals you’re offered.

Another way to help with your credit score is to make sure you’re on the electoral roll.

Can I get a buy-to-let mortgage if I’m self-employed?

Yes, you can get a buy-to-let mortgage if you’re self-employed. However, your application would need to meet the lender’s criteria and affordability checks.

Some lenders see a buy-to-let mortgage for self-employed people as less risky because the rent covers the mortgage payments (which are sometimes lower anyway as they’re often interest-only).

Can I get a joint mortgage for self-employed and employed?

Yes, you can get a joint mortgage if one party is self-employed and the other employed.

In fact, if you’re looking to make a joint mortgage application, it usually means you’ll be able to borrow more overall.

Just be prepared that the lender will require the proof of income (and other documents) outlined at the beginning of this article.

Can I get a mortgage with self-employed 1 year accounts?

Mortgage lenders need to be sure you can repay the mortgage you’re applying for. It’s therefore tricky (but not impossible) to find a lender who’ll accept only 1 years’ worth of accounts from a self-employed individual.

In this instance, proving you have work in the pipeline, or contracts lined up can help. A juicy deposit is also beneficial.

mortgages for self-employed

Mortgage self-employed calculator

It can be quite useful to use a self-employed mortgage calculator to get a ballpark figure of what you could borrow, but how are self-employed mortgages calculated?

It’s generally determined by an affordability calculator, i.e. whether you can afford the repayments on the amount you’re looking to borrow.

To help figure this out, mortgage lenders will look at a variety of factors including your current financial commitments, your lifestyle spending, and any dependents.

What’s the best mortgage for self-employed people?

Often, the best mortgage for self-employed people can be found using a mortgage broker.

A mortgage broker has access to a variety of mortgage lenders, all of whom have different lending criteria.

A broker will use their expertise to match you with the best mortgage lender to suit your circumstances and needs.

FAQs

Who is the best mortgage lender for self-employed?

Mortgage lenders all use different eligibility criteria, therefore a mortgage broker often provides a good route to help find the best mortgage lender for your self-employed application.

What income do mortgage companies look at for self-employed?

Mortgage companies will look at your net profit rather than your turnover for self-employed people. They look at your income over two to three years to take an average.

How long do I have to be self-employed to get a mortgage?

Most mortgage lenders will ask for at least two years’ worth of accounts in order to consider a mortgage application from a self-employed person. This is because they want to check your ability to make repayments on the amount you borrow.

Can I get a mortgage with 3 months’ self-employment?

No, you can’t get a mortgage with 3 months’ self-employment. People who are employed under PAYE need to provide their last 3 payslips for a mortgage application.

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