Mortgages and the Self Employed

July 27th, 2022 | News | By Graham Wingar

The Self Employed and Business owners have an extra consideration when it comes to Mortgages. Here we look at what you need to obtain a mortgage.

Three Requirements Whether Employed or Self Employed

In order to obtain mortgage there are three Main requirements. The first two are consistent whether you are employed or self employed which have only been mentioned briefly. The third is where the main consideration will be for obtaining mortgages for the self employed. 


All residential mortgages for purchase currently require a deposit. This can be as little as 5% and can even sometimes be provided by family members savings being kept in a specific account for an initial period.

Credit Worthiness

Lenders will always check your credit file. This will give them a picture of your past history of borrowing and keeping up with credit commitments. Negative markers on your credit file do not necessarily mean you can not obtain mortgage, however a clean credit record helps to secure the most competitive rates available.


This is where the Self Employed will see the most difference. Lenders will need to see that the loan is affordable for both business security and regulatory requirements. For the employed this can be as simple as seeing a  contract of employment, an employment reference or a latest pay slip. Even if you receive pay slips under your business, if you have a controlling share (typically more than 20%) you will still need to demonstrate your income as a self employed person.

For the Self Employed you will need a longer history. This will typically be two years of trading and proof of income. There are however differences between lenders that may be more beneficial dependent on your individual circumstances. We will look at some of these differences and how they may benefit your application.

If there is an increase in income between your last two years finding the right lender could make all the difference. Many lenders will average the last two years income and base affordability on that figure, while other lenders will take the most recent meaning potentially higher loan.

There may be instances where although self employment has been over a long period, the status may have changed more recently. For example this could be a sole trader incorporating their business into a Limited Company. For some lenders this will mean waiting for the full two years accounts under the new business. There are however some lenders that may consider it as continued self employment and only require one set of accounts under the new business structure.

Some lenders will only take the income distrusted from your limited company as available for affordability. This can be particularly detrimental where the business has greater profit than that distributed. This is quite common as many business owners may only take what they need. There are however lenders who will consider the business profit and not just the profit distributed. This again could be a significant difference in the amount able to be borrowed.


There are many nuances between lenders that will determine the right mortgage for you. Our mortgage advisers can help find the right mortgage for your circumstances.


Your home is at risk if you do not keep up repayments on a mortgage or secured loan. Lenders requirements change continually and the information given was correct at the time of publishing. Before receiving advice you should make sure the company is authorised to do so. The Financial Conduct Authority has a register of all regulated individuals and companies.