Can I Get a Mortgage if I’m Self-Employed?

If you’re self-employed and want to purchase your first property, it’s important to understand the process of getting a mortgage to avoid any nasty surprises.

Some people make the mistake of thinking that only employed workers with a steady salary can get a mortgage. The truth is that self-employed individuals can apply for the same loan products as workers who are paid on a pay as you earn (PAYE) basis.  

Whether you’re a freelancer, sole trader or business owner, being self-employed doesn’t stop you from getting a mortgage, but securing one can be more of a challenge as you need to prove you have a reliable income. 

In this guide, we explain how you can get a mortgage if you’re self-employed and the steps you can take to improve your chances of having your application approved. 

How do I get a mortgage as a self-employed worker? 

As a self-employed worker, you can apply for the same mortgages as everyone else, but you will need to provide more evidence of your income than an employed worker. Although this may seem unfair, some lenders deem you as high risk because there could be swings in your income. However, many lenders will agree to lend you money so long as you can prove that you can afford to repay the mortgage. 

If you spend some time gathering the evidence lenders will likely want to see, you can improve your chances of getting approved for a mortgage. It’s best to do this before you make your application, and some lenders will prefer you to use a certified or chartered accountant to prepare your accounts before you apply.  

 

What proof of income do I need to provide to lenders?

In most cases, lenders will want you to provide a range of documents that show proof of your income, including:

  • Two or more years’ worth of accounts
  • Copies of SA302 forms from HMRC to show your tax calculations
  • Proof of deposit
  • Bank statements
  • Evidence of regular and upcoming work
 

The documents required to prove your income will vary between lenders, so the evidence you need to provide depends on which lender you choose. 

If you’ve only been self-employed for 12 months or less, it will be much harder for you to find a lender willing to accept your mortgage application. That said, each lender has its own criteria, and there are mortgage deals available on the market to suit your circumstances. 

 

Will I be asked to pay a higher mortgage rate if I’m self-employed?

Since there’s no such thing as a self-employed mortgage, you’re entitled to the same range of products and deals as an employed worker who earns the same salary as you. Generally, lenders are only interested in your ability to repay the mortgage, so you shouldn’t have to pay a higher rate if you can provide all the required documents to prove your income. 

If you have a substantial deposit, you should have more borrowing options and get a better mortgage rate. You will also be more appealing as a borrower and secure a better rate if you have a good credit history because lenders will consider you a lower risk. 

 

Has coronavirus affected mortgage options for the self-employed?

Lenders have made it tough for self-employed people during the COVID-19 pandemic, with some tightening their criteria and refusing to provide mortgages to those receiving money from the Self-Employment Income Support Scheme (SEISS). What’s more, some lenders have lowered the amount self-employed people can borrow and are asking for a bigger deposit and more paperwork from them. 

While some lenders continue to tighten their rules, getting a mortgage as a self-employed individual in the coronavirus crisis is achievable because each lender has taken a different approach. That means that there are lenders out there willing to accept applications from self-employed people.     

 

How can I increase my chances of getting a mortgage approved? 

There are several steps you can take to boost your chances of a successful mortgage application, such as:

  • Save as large a deposit as possible
  • Check your credit report for errors 
  • Pay off any debt to improve your credit score
  • Make sure you’re registered to vote
  • Gather all the relevant figures and documents before applying
  • Get a certified or chartered accountant to prepare your accounts
  • Avoid purchasing unusual or unique properties
 

When looking to secure a mortgage as a self-employed individual, you need to be prepared to shop around and compare lenders to find the right one for you.

 

How do I find the best mortgage deal as a self-employed person?

Each lender willing to accept an application from a self-employed worker will have different criteria, so you will need to shop around. We understand you want to pay the lowest possible rate, but you must do your research to find the best mortgage deal. 

Finding the right lender who can lend against your particular criteria is essential, and you’ll be pleased to know there is an easier way to narrow down your options than doing time-consuming research yourself. All you need to do is use the Pitch 4 Finance platform. 

At Pitch 4 Finance, we already know which lenders are most likely to lend to self-employed individuals. The benefit of using our online platform is that you get access to hundreds of lenders at the click of a button, plus it matches you to your perfect lender and guarantees you get the best mortgage deal available to you. 

From accessing lenders offering self-employed people mortgages to getting your application approved, the entire loan process can be managed on the platform. The Pitch 4 Finance platform is designed to make getting a mortgage as easy as possible, and our expert team are on hand to offer support and guidance every step of the way. 

If you have any questions or would like to find out more about how we can help you get on the property ladder when you’re self-employed, feel free to take advantage of our online chat function or call us on 0800 7723 180 to talk to a member of the Pitch 4 Finance team.