Updated: February 23, 2021
Being a self-employed professional, especially one who is earning income from reasonably new platforms such as YouTube or OnlyFans, can make applying for a mortgage a terrifying prospect. However, we’re here to tell you that, while it is technically true that some mortgage lenders prefer customers who are in full-time employment, there are so many options available to those of you who are self-employed, no matter your trade.
It’s also important to note that even if you have had a mortgage declined by a lender or underwriter previously, that with the right advice you can still get a self-employed mortgage.
So, what is a self-employed mortgage? Well quite simply, it is a home loan for anyone who trades in a self-employed capacity – this includes those who freelance, are consultants or who use platforms like YouTube, Twitch or OnlyFans as their main source of income.
Self-employed mortgages don’t drastically differ to a regular mortgage product, however some mortgage lenders specialise in serving self-employed people so you’ll want to make sure you go to one of these lenders.
There are a few things you will need to make sure you have for a self-employed mortgage, which we have listed below:
It’s worth noting at this stage that some mortgage lenders impose age restrictions on self-employed mortgage products. Most are wary if the mortgage term ends past your 75th birthday, although there are some that will agree to lend to customers aged 85 and a smaller amount won’t have any age restrictions, under the right circumstances.
Most mortgage lenders will be looking for at least two to three years’ worth of accounts, however not all is lost. There are lenders who will consider applications with accounts equalling just nine to 12 months, however you may also need evidence that your income is sustainable to get approved.
If you are newly self-employed, you may have to wait until you’ve been working in your field for at least nine months before you consider enquiring about a mortgage product.
The amount you’ll be able to borrow for a self-employed mortgage is based on a multiple of your average earnings. Not every provider uses the same calculations; some will multiply your average earnings by 4.5 whereas some will stretch this to 5 and a small minority may even go as high as 6 times your average earnings.
If you’ve had one strong year but your average income over the last three years is lower when the previous two are factored in, you could look at using a whole-of-market broker, who can help find a lender that offers mortgage products based on just one year’s worth of accounts.
You’ll need to provide your lender with a SA302 self-assessment tax returns, finalised accounts or projected accounts.
Some of the more flexible lenders may consider accepting payslips from your company or family company, or even handwritten payslips if you are paid in cash.
As with any mortgage, you’ll want to save up as much of a deposit as possible, make sure your credit score is in good shape and, ideally, collect two to three years’ worth of accounts. The more boxes you can tick, the more lenders you will have available to choose from and the better your offered rate will be. Applying through a mortgage broker who specialises in self-employed applicants and knows the market inside out can also boost your chances of landing the best interest rates available.
*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.