Self Employed Mortgages – How Much Can You Borrow?

Wondering how much you can borrow on a mortgage if you’re self-employed? Find out with help from an expert mortgage broker

Home Mortgage Affordability Self Employed Mortgages – How Much Can You Borrow?
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Nathan Porter

Reviewer: Nathan Porter

Independent Mortgage Advisor

Updated: March 11, 2024

How we reviewed this article:

Our experts continuously monitor changes in the financial space and work closely with qualified mortgage advisors for factual verification.

March 11, 2024

In this article, we’ll explain how to work out your maximum mortgage borrowing if you’re self-employed and how a mortgage broker can help you maximise this amount. To start off, use our calculator below to get a rough idea of your affordability.

Self-Employed Mortgage Calculator

This mortgage calculator enables self-employed individuals to calculate their maximum borrowing amount based on their trading style, income type, and other key variables.

Select your employment type from the menu

Your Results:

You could borrow up to 

Most lenders would consider letting you borrow

This is based on 4.5 times your net profit or the total income declared. To borrow more than this, you will need to speak to a mortgage broker who specialises in self-employed borrowers

This is based on 4.5 times your share of the partnership's net profit or total income declared. To borrow more than this, you will need to speak to a broker who specialises in self-employed borrowers

This is based on 4.5 times your share of the net profit/salary plus dividends, or total income declared. To borrow more than this, you will need to speak to a broker who specialises in self-employed borrowers.

This is based on 4.5 times your income. To borrow more than this, you will need to speak to a broker who specialises in self-employed borrowers.

Some lenders would consider letting you borrow

This is based on 5 times your net profit or your total income recieved. This income multiple is often unavailable to borrowers who aren't applying through a mortgage broker.

This is based on 5 times your share of the partnership's net profit or your total income recieved. This income multiple is often unavailable to borrowers who aren't applying through a mortgage broker.

This is based on 5 times your share of the net profit/salary plus dividends, or your total income recieved. This income multiple is often unavailable to borrowers who aren't applying through a mortgage broker.

This is based on 5 times your income. This income multiple is often unavailable to borrowers who aren't applying through a mortgage broker.

A minority of lenders would consider letting you borrow

This is based on 6 times your net profit or the total income declared. This income multiple is only available under specific circumstances and is usually only accessible via a broker.

This is based on 6 times your shares of the net profit or total income declared. This income multiple is only available under specific circumstances and is usually only accessible via a broker.

This is based on 6 times your share of the net profit/salary plus dividends, or total income declared. This income multiple is only available under specific circumstances and is usually only accessible via a broker.

This is based on 6 times your income. This income multiple is only available under specific circumstances and is usually only accessible via a broker.

Now that you have a rough idea of your maximum borrowing, get in touch to speak to a mortgage broker who can provide bespoke calculations and access to the best rates and deals.

Get Started

How is self-employed income calculated for a mortgage?

The main difference between employed and self-employed mortgage applicants is that many lenders will apply the income multiple to an average of your earnings over 2-3 years, although the exact way your income is assessed will depend on what type of self-employed trader you are.

Lenders often provide self-employed individuals with mortgages up to 4.5x their annual income (up to 95% of the property’s value) based on 2-3 years of accounts or SA302s. With a substantial deposit, stable income, and strong credit, borrowers may qualify for up to 5x their income, subject to the lender’s criteria.

With that said, it’s not uncommon to find lenders prepared to offer 5 times your salary (and in some cases up to 6 times). However, some lenders set a maximum of 3.5 times the salary for self-employed applicants.

Sole traders and partnerships

Most lenders will calculate affordability based on your average net profit from your last three years of accounts using their own income multiple. If you have been trading for fewer than three years, your pool of lenders will be smaller but it is still perfectly plausible that you can get a mortgage.

For full details, read our guide to mortgages for sole traders and partnerships.

For affordability purposes, partnership  income is calculated in the same way as for sole traders (on average net profits), taking into consideration their percentage share of the business.

Limited company directors

Lots of lenders will only include salary and dividends in your affordability calculation, but some will also take into account any share of retained profits or pension contributions paid before tax.

You can find out more about mortgages for limited company directors in our guide.

Mortgage lenders for self-employed

The table below outlines some of the best rates currently available from mortgage lenders who can help self-employed applicants.

Lender Product Details
Frosted Rates Image

Looking for more rates and deals?

We can match you with a mortgage broker who can provide you with up-to-date bespoke rates and deals from across the entire market.

Last updated May 2024

The rates quoted above were correct at the time of writing and are subject to change at any time at the lender’s discretion. Speaking to a mortgage broker is the best way to keep track of the rates available at any given time. 

Contractors

Some lenders are wary of contractors owing to the chances of experiencing periods without income. For this reason, some insist on 3 years of accounts as a minimum. In most cases, the more years worth of stable or increasing income you can prove, the more you will be able to borrow.

The length of your current contract, evidence of any upcoming contracts, and your industry experience can also play a part in determining how much you can borrow. Even those who are new to contracting can often find a provider willing to assess affordability based on their day rate if they meet the rest of the lending criteria.

Try our calculator below to get an idea of your maximum borrowing:

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.

You’re self-employed if you run your business for yourself and take responsibility for its success or failure

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.

Maximise your chance of approval with a dedicated specialist broker

Get Started

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How to maximise your borrowing potential if you’re self-employed

Your maximum borrowing is based on an assessment of your income and outgoings. If you need to borrow more than the standard 4.5x salary on a mortgage, your best bet is to find a specialist lender who offers mortgages based on higher income multiples.

Below are some tips to help you stretch your maximum mortgage borrowing:

  • Find the right mortgage broker: There are brokers who specialise in self-employed mortgages and they have deep working relationships with lenders who offer mortgages based on x5 salary and higher.
  • Tidy up your finances: Think about getting rid of unnecessary subscription service, cutting back on takeaways and not using online gambling sites in the six months before you apply. Lenders won’t take a favourable view of these – particularly if it’s a close call.
  • Keep away from payday loans and don’t max out your credit card: Both can be perceived as indicators that finances are tight and could affect your borrowing capacity.
  • Consider business expenses: Legitimate business expenses can lower your profit margin and tax bill. But when it comes to your borrowing capacity, this can be detrimental. So think carefully before making any major purchases if you’re considering a mortgage application in the near future.

Make an enquiry and we will match you with a broker who specialises in self-employed mortgages.

We're so confident in our service, we guarantee it.

We know it's important for you to have complete confidence in our service, and trust that you're getting the best chance of mortgage approval at the best available rate. We guarantee to get your mortgage approved where others can't - or we'll give you £100*

Happy approved couple

How much can you borrow on a buy to let mortgage?

Being a landlord is a form of self-employment. And thankfully, lender appetite for buy to let mortgages is pretty high.

Affordability is calculated differently with buy to let. In most cases you will need to demonstrate that the rental income will cover at least 125% of the mortgage payments – and in some cases as much as 140%.

Try our calculator below to work out your maximum borrowing based on rental income as well as what your repayments could look like:

Buy-to-Let Mortgage Calculator

Our buy-to-let mortgage calculator can show you how much your mortgage could cost you each month and overall. Simply enter the rental property value, deposit, anticipated monthly rent, interest rate, mortgage term and our calculator will do the rest.

Enter the value of the rental property here
£
A deposit of at least 20% is usually required for a buy-to-let mortgage
£
Most lenders will require a deposit of at least 20%
Deposit must be less than the property value
Enter the anticipated monthly rent here
£
Enter the mortgage rate, 5.5% is a typical rate currently but this can vary
%
Enter the mortgage term, 25 years is the average but lenders can offer shorter and longer terms
years
Borrowing

Loan to Value ratio (LTV):

Most lenders won't offer buy-to-let mortgages over a LTV of 80%.

Interest Cover Ratio (ICR):

Most lenders require rental income to be at least 125%-145% of the interest repayments for a buy-to-let mortgage.

Get started with a specialist buy-to-let broker to find out how much they could help you save on your monthly mortgage repayments.

Get matched with a specialist self-employed mortgage broker

Getting approved for a mortgage as a self-employed person is all about finding the right lender to suit your circumstances. Going it alone and being rejected is more than just frustrating, it can also harm your credit file.

With our broker matching service, you can connect with a broker who specialises in securing mortgages for those in your situation, be that as a sole trader, partner, limited company director or contractor.

It only takes a couple of minutes for us to take some basic details and find your ideal broker. Call today on 0808 189 2301 or enquire online to arrange a free, no-obligation chat.

FAQs

Yes. Lenders will need to satisfy themselves that your business is back on track and you can afford the repayments, but having accessed support during the pandemic will not count against you in itself.

It makes sense to get a quote from your existing lender, but you should always check the whole of the market when remortgaging as you can often borrow more and save thousands by switching.

No. Self-certification ceased in 2014 when the Financial Conduct Authority tightened up lending regulation. With that said, approaching a specialist lender offers a degree of flexibility in underwriting that self-cert mortgages were introduced to provide and can help extend your borrowing capacity.

Ask a quick question

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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 Online Mortgage Advisor of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

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