Self-Employed Mortgages With 1 Year’s Accounts

Explore your options in getting a Self Employed Mortgage with 1 Years accounts

What type of company do you have?

Home Self Employed Mortgages Self-Employed Mortgages With 1 Year’s Accounts
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Nathan Porter

Reviewer: Nathan Porter

Independent Mortgage Advisor

Updated: May 16, 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.

May 16, 2024

We explain how to get a self-employed mortgage with only 1 year’s accounts and what possible difficulties you may face. We identify which lenders will consider your application, what to do if you’ve been trading for less than 1 year, and how being newly self-employed affects any remortgage applications.

Can you get a self-employed mortgage with only 1 year’s accounts?

Yes, but it is more difficult than if your accounts went back further. Most lenders need you to have been self-employed for at least 2-3 years before they’ll offer you a mortgage. As a result, there will be fewer mortgage lenders who consider these types of applications but they do exist.

Why it can be more difficult to get approved

It’s more difficult to secure a mortgage at this stage in your self-employment because mortgage providers will see the uncertainty of your future earnings as a risk. They won’t be able to calculate your income with as much confidence in how affordable a mortgage is for you. As a result, most lenders only consider applications from self-employed individuals with three years of accounts or more.

What proof of income will lenders require?

If you only have 1 year’s trading record then some lenders will still be happy to consider your application if, in addition to a set of certified accounts or your self-assessment tax record for that year (SA302), you can provide a suitable financial projection for at least the next twelve months from a qualified accountant.

How much you could borrow?

If a lender accepts applications from the newly self-employed, you can borrow at least 4-4.5 times your income. The figure that is used to calculate your income is either your share of the net profit or the total income received on a self-assessment tax return. If you are listed as a limited company director, income is based on the director’s salary and dividends received.`

In some cases, if you think that your subsequent year’s income will be much higher than your first year’s, it is possible to find a lender who will consider an application calculated on a projection. The projection will need to be confirmed by a qualified accountant.

You can use our mortgage calculator if you’re looking for a quick estimate of your maximum borrowing.

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

Typical rates for self-employed mortgages

The table below provides an illustration of some of the best rates available for self-employed mortgages. Having less than three years track record may make it less straightforward for you to qualify for the most favourable mortgage terms. However, a skilled mortgage broker will be able to help you identify the right lenders, offering the most competitive rates, for your circumstances.

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.

Maximise your chance of mortgage approval with a specialist in self-employed mortgages

Get Started Phone Icon 0808 189 2301

How to get a self-employed mortgage based on 1 year’s accounts

It is still possible to get a mortgage if you’ve only recently become self-employed and you can make the process a lot smoother by following a few simple steps. First, make an enquiry with us and we’ll arrange for a specialist mortgage broker to contact you who can help with:

  • Advice on the specific eligibility criteria and documentary evidence mortgage lenders will look for in such cases – such as additional finance projections for the next one or two years to corroborate your one year’s earnings so far
  • Downloading and optimising your credit records in order to identify any inaccuracies or outdated information that could hinder your chances of approval
  • Finding the best mortgage lenders who have previous experience in this area of lending and assist with submitting your application

 

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

Which lenders will consider your application?

Currently (August 2023) the following lenders are examples of providers who could extend you a mortgage, based on only 1 year of accounts. These products are subject to change, however.

  • Vida Homeloans – Will accept only 1 year of evidence of income if that is how long a person has been trading. Additionally, a qualified accountant’s projection or latest 3 months’ business bank statements are needed.
  • Norton Home Loans – Applicants need to pass an Equifax credit search, provide 1 year proof of self-employed income and 1 month bank statement.
  • Scottish Building Society – Will only consider applications for mortgages of 80% or less loan-to-value with 1 year of financial history. Applications need a projection from a qualified accountant. The type of business and number of shareholders can influence the final approval decision.

Important

It is important to note that it isn’t always this straightforward and there is usually a lot more work involved in getting to a decision, but it is possible to get a mortgage based on one year’s accounts if you apply through the right broker.

What if you’ve been trading for less than one year?

If you have been trading for under 12 months, it is highly unlikely that you will find a provider which will consider your application. Lenders have to extend loans responsibly, and if they have no tangible evidence that you can afford your mortgage, they are not going to do so.

However, if you are nearing the end of your first year trading, you could approach a specialist lender that may offer you a mortgage in principle based on your current figures and your projected income. If approved, your mortgage in principle will usually last around 3 months. You can start looking now for potential properties to buy once you have completed your first year as you’ll know what you can afford.

There are also options available for self-employed applicants without accounts. They are situation-specific but you may be eligible for these mortgages. For example, if you are a contractor, a construction industry scheme contractor, or if you are a new business owner with previous track records in similar businesses.

Remortgaging when you’re newly self-employed

If you have only been trading for a year, it is still possible to remortgage when self-employed and lock in a fixed-rate deal. However, as with mortgage applications, it can be more difficult – lenders like to see 2-3 years of accounts as a minimum. You may find that your list of options is not as long as you would have wanted, giving you less choice in terms of rate.

Working with a broker is, again, your best bet. They’ll know what deals are an option for you when you are remortgaging. They’ll work closely with you to help you access the best rate you can with the income evidence you have available.

Why Use Online Mortgage Advisor?

While it’s not impossible to get a mortgage when you’re newly self-employed, it is a more difficult process than if you had been trading for a number of years. Plus, there are fewer choices available to you in terms of mortgage providers. That’s where we can help!

We can connect you with a specialist broker who will know what lenders will consider your application as a newly self-employed person and what you will need to do for your application to be successful. Therefore, you’re more likely to be approved and improve your chances of securing the best rate possible given your circumstances.

Our free, no-obligation broker matching service will connect you with the best broker for you. Call us on 0808 189 2301 or enquire with us today so we can put you in touch with a specialist.

Maximise your chance of mortgage approval with a specialist in self-employed mortgages

Get Started Phone Icon 0808 189 2301

FAQs

Yes, bad credit mortgage lenders that consider applicants with one year’s books and credit issues do exist, but with some restrictions.

Currently, you would be required to have at least 15% deposit (15% equity if you want to remortgage with bad credit), and no defaults, CCJ’s, mortgage arrears in the last 2 years.

If you had missed /late payments on credit in the last 12 months you still may be considered, and often any issues with mobile phone companies are ignored.

Yes. If you have one year’s accounts you can get Help to Buy scheme assistance and buy with just a 5% deposit (subject to credit score and usual criteria).

There are very few lenders considering self-employed Help to Buy mortgages, but they do exist and often have very attractive rates.

If a mortgage lender has asked you to prove your income, then no. However, you should keep in mind that many buy-to-let lenders will be more concerned about the property’s rental potential than your earned income.

See our guide to buy-to-let mortgages for the self-employed for more information.

Potentially, yes but it’s likely to be only in quite specific cases. For example, if you’re a professional sports person then your current earnings may have a shelf-life whilst you’re competitive in that particular field – this may influence how a lender views your capacity to maintain your repayments beyond this timeframe.

In reality, most general businesses should not be affected or considered too risky for the purpose of applying for a mortgage.

Ask a quick question

We can help!

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.

Our Brokers

Get in touch today

Make an enquiry and we'll arrange for an experienced mortgage broker we work with to contact you straight away.

1 of 3
£
£
£
2 of 3
3 of 3 Send!

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

Maximise your chances of approval, whatever your situation - Find your perfect mortgage broker

By browsing our site you consent to our use of cookies.