If you're self-employed, getting a mortgage feels like you'rebeing asked to “prove” your income in a way employees never are. You know your work is steady. Lenders just want to see it on paper.
Here’s a clear, grounded guide to how it works and what to expect.
What “self-employed” means to a lender
You’re treated as self-employed if you’re:
- A sole trader
- A partner in a business
- A limited company director owning 20–25%+
- A contractor or freelancer (even with long-term clients)
If any of these fit, lenders mostly look at your share of the business’s income, not the business as a whole.
What lenders actually check
Lenders want to know one thing: Is your income stable enough to support the mortgage?
They usually review:
1. Your earnings over 1–3 years
- Most ask for two years’ accounts or SA302s.
- Some accept one year, but criteria are tighter.
- If your income varies, they often take an average or the lower year.
2. How your income is structured
- Sole traders: They use your net profit.
- Limited company directors: They typically use salary + dividends.
- Some lenders will consider retained profits (useful if you keep money in the company).
3. Your current trading position
Expect to be asked for:
- Recent business bank statements
- A brief accountant’s overviewif income dipped
- Evidence of upcoming work if you’re a contractor
4. Your personal finances
Your credit file, debts, childcare costs, and monthly spending all feed into affordability, just like any other applicant.
Common hurdles (and how to make them smaller)
Irregular income
Many self-employed people have one strong year and one quieter year. Lenders only get nervous if the trend is unclear. A short note from your accountant explaining the dip helps.
High business expenses
Claiming everything you can is great for reducing your tax burden, but it also lowers your mortgage affordability. Some lenders are more flexible; a mortgage broker will know which ones are.
Newly self-employed
If you only have one year of trading, you’re not out of the running, but you’ll have fewer lenders to choose from.
Switching from employed to self-employed
Some lenders will accept your previous PAYE history ifyou’re doing the same role on a freelance basis.
What strengthens your application
- Organised accounts (filed on time, clean, no odd jumps)
- A qualified accountant — lenders trust professionally prepared numbers
- Consistent bank statements showing regular invoices and payments
- A clear explanation for anything unusual
- A sensible deposit (bigger deposit = more lender choice)
How much can you borrow?
Affordability for self-employed borrowers follows the same rules as everyone else; the lender runs your income through their calculator.
The difference is which income figure they use:
- Sole traders: net profit
- Directors: salary + dividends (or retained profit with some lenders)
- Contractors: day rate x assumed working weeks (usually 46–48)
Because criteria vary so much, two lenders can give you completely different answers.
Why a mortgage adviser matters more here
Self-employed cases are rarely “standard.”
Some lenders:
- Accept one year of accounts
- Use retained profits
- Are generous with contractors
- Ignore a temporary dip if the business is stable
- Others won’t touch any of that.
A broker matches your income profile to the lender whose policy actually fits — and that can change the borrowing amount by tens of thousands.
Final thoughts
Being self-employed doesn’t make you a risky borrower. It just means the evidence lenders need is different, and sometimes more detailed. Once the numbers line up, your application moves like anyone else’s.
If you’re preparing to apply, start with the basics: clean accounts, up-to-date tax returns, and a lender who understands your type of income. A good mortgage adviser can help you shape the application and avoid unnecessary back-and-forth.