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Calculate How Much You Can Borrow If You Are Self Employed

Find out how much you can borrow if you are self employed and how to access the best rates

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 28, 2022

Affordability for self-employed mortgages isn’t always straightforward. Without the security of a permanent job and a fixed income, it can be difficult to persuade mortgage lenders to let you borrow the amount you need.

Thankfully every lender has a different policy. Some are more generous than others in terms of the income multiples they offer, and the expert advisors we work with know who they are.

How much can you borrow for a mortgage if you’re self-employed?

If you are employed of self-employed and meet the mortgage lender’s criteria, you can usually borrow 4.5 times your annual income.

This is the maximum most mortgage lenders would let you borrow, although some will consider offering 5x your income, and there are even a handful of specialist lenders who will offer up to 6x income in the right circumstances. Check out our mortgage affordability calculator to get an indication of how this may look for you:

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Mortgage Affordability Calculator

Our affordability calculator can tell you how much you can potentially borrow from a mortgage lender. Simply enter your total household income below and our calculator will do the rest.

Input full salaries for all applicants
£

You could borrow up to 

Most lenders would consider letting you borrow

This is based on 4.5 times your household income, the standard calculation used by the majority of mortgage providers. To borrow more than this, you will need to use a mortgage broker to access specialist lenders.

Some lenders would consider letting you borrow

This is based on 5 times your household income, a salary multiple you might struggle to qualify for without the help of a broker. This income multiple is not widely available to customers who are applying directly with a lender.

A minority of lenders would consider letting you borrow

This is based on 6 times your household income, a salary multiple you will struggle to get without a broker. Six-times salary mortgages are usually only available under very specific circumstances.

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

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What else do you need to know?

To get the mortgage offer that is right for you, it’s vitally important to find a lender who is best positioned to help self-employed borrowers. The way they will assess your income will be different compared to a customer who is in full-time employment.

Some lenders, for instance, will want you to be able to produce accounts covering a specific number of years while others may only allow you to declare a percentage of any bonuses or commission you might earn.

Read on for more about these factors or make an enquiry so one of the expert brokers we work with can discuss self-employment mortgages with you in more detail.

Mortgage Lenders for Self employed

Showing a range of the latest UK mortgages from lenders considering applications where one or more applicants are self-employed. Updated as of June 2022

Mortgage amount £150,000, over 30 years

24

Lenders

Mortgage Lender #1

£576

Monthly payment

95%

Maximum LTV

3.05% 3 year discounted

Initial rate

£199

Product fees

4.9% APRC

Overall cost for comparison

Mortgage Lender #2

£664

Monthly payment

95%

Maximum LTV

3.39% lifetime discounted

Initial rate

£0

Product fees

3.5% APRC

Overall cost for comparison

Mortgage Lender #3

£636

Monthly payment

90%

Maximum LTV

3.05% 3 year discounted

Initial rate

£199

Product fees

4.9% APRC

Overall cost for comparison

Mortgage Lender #4

£685

Monthly payment

90%

Maximum LTV

3.64% 5 year fixed

Initial rate

£774

Product fees

4.2% APRC

Overall cost for comparison

Mortgage Lender #5

£504

Monthly payment

75%

Maximum LTV

1.31% 2 year fixed

Initial rate

£995

Product fees

3.3% APRC

Overall cost for comparison

Mortgage Lender #6

£879

Monthly payment

75%

Maximum LTV

5.79% 2 year fixed

Initial rate

£0

Product fees

4.9% APRC

Overall cost for comparison

Get Started Ask Us A Question

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

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Sole trader mortgage affordability

For a lender to establish a self-employed borrower’s annual income, a proven and well-documented history of trading is required.

Most lenders require three years trading history before they will consider the applicant’s income stable enough to lend on. Some are happy with 2 years, and others will accept sole-traders and partnerships a mortgage with 1 year self-employment income.

Regardless essential to have an accountant, you will need your self-assessment tax year overview, and SA302 documents – these outline the total annual turnover, expenses, and net income received.

We're so proud of our customers

See how our customers managed to borrow more after they were matched with a specialist broker.

Heather
Hull, UK
I became a self-employed Personal Trainer last year, but I was refused a mortgage from Nationwide who told me I haven’t been self-employed for long enough to get approved. Online Mortgage Advisor found me a new broker and she secured my mortgage the same day I got in touch.
Jason
Cornwall, UK
I had saved for a deposit for what seemed like forever, but the bank I approached said my income simply didn’t stretch far enough. I found Online Mortgage Advisor’s website and was matched with Gareth. He found me a lender who would borrow 5.5 times salary and I finally got accepted.

Company director mortgage affordability

Limited company director mortgages are slightly different as they are typically registered as PAYE employees of the business, which then pays out the individuals’ tax-free allowance as a salary, and then any additional income paid as dividends from profits.

Most lenders will only consider salary plus dividends, however there are several that can consider the applicants‘ share of net profits if money is left in the business.

These could typically include:

  • Salary
  • Dividend
  • Share of net profit (retained profit)
  • Pension contribution
  • Car allowance

It is common for directors to have a private pension contributed to by the company before tax is paid, which could be taken as a salary should the director choose to do so – for this reason there are mortgage lenders willing to consider a pension contribution as a potential income and add this into the calculation when establishing the borrower’s income.

This is useful for borrowers looking to apply for the biggest mortgage possible based on their self-employed income.

Below is a working example of how different lending policies can significantly impact maximum loan sizes and affordability for Ltd company directors:

For this, the maximum loan could be very different lender to lender, as an example:

For a business that made 55k net profit, pensions of 3k and other allowances of 2k, and has taken 11.5k in salary and 30k of dividends.

. Lender A Lender B Lender C
Lender Type A typical example of a mainstream mortgage lender A more flexible lender for self-employed borrowers A specialist self-employed lender
Income Considered Considers salary + dividend Considers salary + dividend + pension + allowances Considers share of net profit + pension + allowances
Income Calculation 11,500 + 30,000 = 41,500 11,500 + 30,000 + 3,000 + 2,000 = 46,500 55,000 + 3,000 + 2,000 = 60,000
Max Lending (@ 4x Income) £166,000 £186,000 £240,000
Max Lending (@ 5x Income) £207,500 £232,500 £300,000

As you can see, lending policy and affordability assessment can have a massive impact on an individual’s’ ability to borrow.

Sadly many people stop at lender A, then change their plans accordingly which can mean missing out on the dream home and settling for less, or perhaps even borrowing money from the bank of mum and dad, whereas had they spoken to a specialist and found lender C, they could well have been able to borrow almost double!

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Can you use your contractor income for a mortgage?

Getting a mortgage as a contractor can be quite tricky. This is partly because lenders have different criteria on what defines a contractor, which in turn dictates how much mortgage a contractor can get.

Typically, you are either an employed person working on a fixed or short term contract (this often includes charity/government workers), or you are a self-employed person that works through one main company (This may include consultants,  tradesmen, designers, IT or marketing professionals etc).

Every lender is different and will have their own policy on who they will and won’t lend to; and it’s usually based on how long you’ve been contracting for, how long you’ve worked in that industry, if you’ve had your contracts renewed, how long you have left on your contracts etc.

There are specialist lenders who will consider applications from contractors, so a chat with one of the advisors we work with, who are experts in getting mortgages for contractors, may be well worthwhile.

Speak to an expert about self-employment mortgage affordability

It is really important to get advice from an expert mortgage broker who knows the market and can make the vital difference between having your application as a self-employed person accepted or refused.

We work with a team of specialist advisors who will be able to help you whatever your circumstances. We don’t charge a fee and there is absolutely no obligation or any marks on your credit rating.

Call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry online. 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 no obligation or marks on your credit rating.

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We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in Self-Employed Mortgages.

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.

Whatever your situation, we've got it covered. Get started with an expert in self employed mortgages

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