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Getting a mortgage as a freelancer

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 17, 2022

The UK’s freelance/self-employed sector has grown steadily over the past decade.

As it stands 14.8% of the working population is self-employed, as a number of people decided to go it alone after being laid off due to the recession or to favour the potentially attractive financial rewards and work/life balance that comes with working more flexibly.

This of course brings greater need for lenders to change their policy and be more flexible to cater for those on incomes that are not straightforward basic salaries, and thankfully, for many for those getting a mortgage as a freelancer in the UK, we can now say that there are some great options out there.

How to get a freelancer mortgage

So can you get a mortgage as a freelancer? The simple answer is ‘yes’, depending on a number of criteria.

If you’ve had a look online already, you’ll know that comparison tables for freelancer mortgages don’t really exist, and that generic rates tables are pretty useless for borrowers that have specific needs as they don’t tell you which lenders are able to cater for which type of income.

Thankfully, the advisors we work with are experts when it comes to mortgages for self-employed people and we can put you in touch with exactly the right mortgage broker for freelancers and contractors – someone who has access to the whole market, and who understands contracts and lending policy to be able to match you with the best lender.

Why do freelancers struggle to get a mortgage approved?

Whether you’re a freelancer or contract worker, if you know where to look, there are plenty of options available if you want to apply for a mortgage. Many lenders have tightened their lending criteria, which has made it more difficult for freelancers and contractors in general, but this has actually opened up new markets for specialist lenders who are offering competitive deals.

Sadly, most lenders decline mortgage for freelance workers and contractors without a perfect 3-year history of income and chunky deposit, and most brokers don’t understand the contracts or lender policy properly to help. Why?

To start with, most of them are not specialist freelance mortgage brokers, so if they don’t understand the industry, they are rarely able to help. So if you’re a freelancer applying for mortgage, you should talk to one of the advisors we work, they are specialists and will do everything they can to help you get a positive outcome.

Are you Employed or self-employed?

One problem is that freelancers and contractors tend to fall into the grey area between employed and self-employed, so they may be outside criteria for many lenders, who stipulate 3 years self-employed accounts (when a freelancer might not have these), or permanent employment with a contract.

Lenders like stability

Many lenders tend to want set, fixed, established, and reliable income on which to assess their lending. If someone is moving contract to contract, or working on multiple small jobs with different clients, they are less able to evidence a stable income.

If you are working on multiple jobs, or even one larger project, being classed as self-employed really comes down to who is paying tax and NI. If the client pays you gross then you’re self-employed, if they pay you net and send your tax to HMRC at source, you’re considered as employed by most lenders.

Most brokers aren’t freelance mortgage experts

Most brokers, even whole of market, rarely come across a freelancer or a contractor, and as such have no experience of which lenders consider applications, what they want to know, what information needs collecting, and what they do and don’t accept.

As a result many creditworthy borrowers are turned away (and take to the internet to find us!).

Lenders have thousands of criteria on a world of subjects that make it hard for brokers to keep up, as a result, you really need to speak to a specialist who handles the type of mortgage you need on a regular basis, which is why we exist!

Make an enquiry and we’ll have one of the freelance mortgage specialists give you the right advice.

How long do you need to be a freelancer before you can get a mortgage?

When trying to secure a mortgage the length of time you’ve been going it alone is something lenders will consider. Most lenders want accounts covering three years, although some will consider 1 to 2 years trading and a few may be OK with as little as six months.

Over time of course, having a variable income as a freelancer is something that becomes less of an issue, as it is easier to build a picture on how sustainable and reliable your income is.

If you are new to freelancing or have recently switched from employed to self-employed, you may apply for a mortgage with the wrong lender and end up being declined.

Getting a mortgage you’re a self-employed freelancer

If you’re self-employed in the UK, lenders typically require at least three years accounts that show proof of your income, although some ask for two years, and a handful are happy with just one years’ accounts, (one or two can even make exceptions and accept someone trading for just 9-10 months in the right circumstances).

The rules here are the same if you’re a sole trader, Ltd company or part of a partnership (less common for freelancers), just the income figures can differ (For a mortgage as a sole trader mortgage lenders will mostly use the net profit, Ltd company directors will be based on net profits or salary + dividends).

This is evidenced either as accounts preferably prepared by a chartered or certified accountant, or as tax returns, showing how much income you’ve declared to HMRC and the amount of tax you paid.

The SA302 can provide this proof, as would a ‘tax year overview.  HMRC no longer provides a paper SA302 form, but many lenders will now accept a downloaded version.

Getting a mortgage if you’re a freelancer on fixed term contracts

If you are on contracts that have a fixed date, then there are lenders willing to consider you sooner than this, if for instance, it has been renewed at least once, or you have more than 6 months left to run.

Lenders will look at whether you’ve been in the same profession over the past few years, or whether you’ve had a few different roles. The same role can be preferable but is not essential.

The key for most lenders will be how much you earn and how sustainable that level of income will be. We work with advisors who are specialists in this area and have the experience and expertise to help you get a positive outcome.

If the question is, can I get a mortgage as a freelancer? And you’re unsure about whether your contract or freelance income is suitable for a mortgage, then make an enquiry and one of the experts can give you the right advice.

Calculate how much you can borrow as a freelancer

Once you have approached a lender who is happy to consider your application as a freelancer, most underwriters will assess your affordability like any other mortgage applicant.

Establishing what your income is would be the first step:

  • Sole traders: As mentioned above, if you are a sole trader they would use your net profit (often average over the last 3 years, although some will use most recent, which can be higher and thus offer a larger loan),
  • Ltd company directors: Most lenders consider salary + dividends, however, some will look at share of (retained) net profit if this is higher, giving a higher loan amount.
  • Contractors: Most lenders will look at either the total contract value, or the daily rate. If daily, lenders tend to multiply this by five days a week, and the number of working weeks (typically 46 to 48 weeks) to calculate out how much you’re likely to earn per year.
  • Employed workers: Basic salary + any additional income lines (which might be considered as 100% down to 0%, depending on what, and how regular/sustainable it is)

If you work as a freelancer on a contractor basis, use our calculator below to work out how much you may be able to borrow for a mortgage (if not, read on to see some examples of how this may work out for you):

calculator icon

Contractor Mortgage Affordability Calculator

Our contractor mortgage calculator will tell you how much you can borrow, whether you work in an employed or self-employed capacity. Select your trading style below, enter the relevant details about your income and our calculator will do the rest.

The amount of money you earn each month. If it varies, put the average
The amount of money you earn each month. If it varies, put the average
The amount of money you earn each day. If it varies, put the average
If you don't work the same days a week, put the average

You could borrow up to 

Most lenders would consider letting you borrow

This is based on a multiple of 3-4.5 times your income, a standard calculation used by the majority of UK mortgage lenders. You should speak to a mortgage broker for bespoke calculations if you have been contracting for less than 12 months, your contract is coming to an end, or there is uncertainty around your long-term employment.

This is based on a multiple of 3-4.5 times your income, a standard calculation used by the majority of UK mortgage lenders. You should speak to a broker for bespoke calculations if you’ve been self-employed for less than 2-3 years, have declining profits or fluctuating income.

Some lenders would consider letting you borrow

This is based on 5 times your income, a calculation only some lenders are willing to offer. You may struggle to find a lender who will offer this income multiple to an employed contractor without the help of a broker, and you should seek advice from one regardless if there is any uncertainty around your employment situation.

This is based on 5 times your income, a calculation only some lenders offer. You might need a broker to access this salary multiple and should take advice from one regardless if you’ve been self-employed for less than 2-3 years, have declining profits or fluctuating income.

A minority of lenders would consider letting you borrow

Only a small number of options are available for employed contractors who want to borrow based on this salary multiple. Few UK mortgage lenders offer mortgages based on x6 income under any circumstances, and you’ll almost certainly need the help of a specialist mortgage broker who knows this corner of the market inside out to access them.

Only a small number of options are available for self-employed contractors who want to borrow based on this salary multiple, as few mortgage providers are willing to offer 6 times salary deals. You’ll almost certainly need the help of a mortgage broker to borrow this amount.

Get Started with an expert broker to find out exactly how much you could borrow.

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Applying the affordability calculation is the next step

Some have complex affordability models and cap at certain loan to income ratios, others will consider simple income multiples from the start, deducting any debts and commitments from this figure.

Using your established freelance income on how to  (whichever method they use to work this out), a typical rule of thumb for a ballpark figure is lending up to 4.5 or 5 times your income (with a handful considering up to 6x income).

Example: Daily rate = £200 x 5 days x 46 weeks = £46,000 per year

Income multiple cap Maximum loan
4x income £184,000
5x income £230,000
6x income £276,000

As you can see, the different calculations used between lenders can create a huge range of affordability, so if you have been declined by one lender don’t give up! Make an enquiry and speak to an expert who can give you some accurate advice how to get a mortgage as a freelancer.

Freelancer buy to let mortgages

If you’re a freelancer and want a buy to let mortgage, this is certainly possible. Most lenders have minimum income thresholds which causes a lot of borrowers on variable, or income that is hard to prove to be declined as they can’t evidence they earn enough. For some lenders this is £15k, others £20k, and some even in excess of £25k.

Thankfully there are some lenders with no minimum income requirements, so long as you already own a main residence and the purchase is for a buy to let property to rent out, and so long as the rental income is enough to cover the mortgage sufficiently.

If you don’t own a property at all then most buy to let lenders will treat your personal income as the main driver for affordability, as they would be concerned about the buy to let mortgage being used to obtain a property to live in, to sidestep the need for evidence it is affordable.

If you own a main residence and are an experienced landlord with a portfolio of properties, then there are lenders willing to consider the mortgage without any income evidence at all.

Make an enquiry and one of the buy to let specialists will be able to establish your situation and provide the right advice.

Will bad credit affect a freelance mortgage application?

“Adverse credit” is a term used to describe someone with credit issues on their credit file (which tracks your payment conduct for 6 years). A less-than-perfect record of repaying credit commitments isn’t always a problem of course, but can cause issues with new lenders, depending on the type of credit issue and when it was registered.

Thankfully there are lenders happy to consider borrowers with all types of credit issue, including:

  • Low credit score
  • Late payments
  • Mortgage arrears
  • Defaults
  • CCJs
  • Debt management plans
  • IVA
  • Bankruptcy
  • Repossession

Having credit issues can limit the number of lenders you’ll have access to and adding this to the fact you are a freelancer, the options you have maybe even more limited.

That said, thankfully there are bad credit mortgage lenders who accept freelance income and certain types and dates of adverse credit, depending on your loan to value.

To get an accurate idea of whether you’ll be eligible, make an enquiry with one of the experts today!

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Joint mortgages with one freelancer and one employed applicant

If there are two applicants – one employed and one freelance – bear in mind that not all mortgage lenders will take the self-employed income into account.

Those who do accept self-employed income will treat it like any other joint mortgage, working out how much you’re both likely to earn and can therefore afford collectively.

Those that don’t accept the freelance income may consider that applicant as a financial dependent, and this can not only mean the affordability is based on the employed applicant’s income alone, it can further impact the application as lenders will factor in an additional mouth to feed in the household.

For this reason, getting a mortgage if freelance means the right advice can be crucial to ensuring the borrowers can get the mortgage they want, factoring both incomes.

If no lender will accept the freelance income, then it may be an idea for the employed applicant to take the mortgage in their own name to avoid additional reduction of affordability.

Speak to an expert freelance mortgage advisor today

If you like anything in this article or you’d like to know more, call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry here.

Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances.  – We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.

Ask a quick question

We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects.

Ask us a question and we'll get the best expert to help.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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