What is a self-employed mortgage?
There isn’t really any such thing as a self-employed mortgage per se, but this terminology is occasionally used when a mortgage lender offers a home loan to a self-employed professional on a bespoke basis. Technically speaking, though, the self-employed can apply for exactly the same mortgage products as people on PAYE salaries.
The only real difference with self-employed borrowing is the way the lender will assess the customer’s income. You will need to evidence your employment history with accounts. Most mortgage providers need two-to-three years’ worth, but some will accept less.
The mortgage lender will work out how much you can borrow based on your average income from the period covered by the accounts and apply an income multiple to it (usually up to 4.5x salary) to determine the maximum loan amount that you qualify for.
Mortgages for the self-employed otherwise work exactly the same as home loans for full-time employees.
How do I get a mortgage if I’m self-employed?
The application process is the same as it would be if you were in full-time employment, except the way you need to evidence your income will be different. As mentioned above, you should aim to provide accounts covering two-to-three years, although some lenders will consider your application if you have less than that.
Deposit requirements are no different for self-employed people, with most lenders requesting at least 10% of the property value, although 5% deals are available in the right circumstances. If you only have a year or less worth of accounts or your income has fluctuated in recent years, you may be asked to put down more deposit, and this is likely to be the case if you have bad credit, too.
Starting the application process with expert advice from a broker who specialises in self-employed customers is highly recommended. They know exactly which lenders to approach for borrowers who trade this way, so you’ll stand the best chance of landing the most competitive rates.
Three steps to your self-employed mortgage
- Make an enquiry with us – it only takes a few seconds
- We’ll check the information you’ve provided and arrange a free, no-obligation chat with a mortgage broker who specialises in self-employed customers
- Your expert broker will search the entire market for the best deals that you qualify for and narrow down the lender and product that is the best fit for your requirements