Self-Employed Mortgages With 2 Years’ Accounts
If you’ve only been self-employed for two years and are looking for a mortgage, get expert guidance from a broker who's a specialist in self employed mortgages
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We’ll explain how you can still get a mortgage if you’re self-employed with less than 2 years of accounts, what additional information mortgage lenders will need, and why using the services of a mortgage broker can boost your chances of success.
Can you get a mortgage if you’ve been self-employed for two years or less?
Yes, it’s possible. In fact, there’s no specific amount of time you have to have been self-employed before you can apply for a mortgage. The caveat, however, is that many lenders require documentation showing three years’ worth of (healthy) accounts and supporting paperwork. That’s because they’re looking to make sure you’ll be able to pay back the loan and seeing your earnings over a longer period of time helps to determine how likely that is to happen.
A good number of (mainly specialist) lenders do, however, accept fewer years of paperwork. A broker specialising in the self-employed mortgage market would be able to tell you which lenders they are so you can avoid rejection and subsequent black marks on your credit history.
How to get a mortgage with less than two years of accounts
First of all, you should seek the advice of a specialist broker who has experience arranging mortgages for people in a similar situation. If you make an enquiry with us our free broker-matching service will be able to match you up with the right advisor.
Your mortgage broker will then be able to help with the following:
- Gathering sufficient proof of income: This includes copies of your business’ certified accounts and the SA302s for the last two years. In addition, an income projection statement for the next trading period (ideally prepared by a suitably qualified accountant).
- Download and optimise your credit reports: As you only have 2 years of trading history it’s vital that there are no other obstacles that could hinder your application. Ensuring you have a clear credit history will definitely help your cause, so it’s worthwhile checking your credit records in advance.
- Finding the right mortgage lenders: Your mortgage broker will be able to quickly identify those lenders who look more favourably on applications of this nature. Saving you time and avoiding any unnecessary rejections.
- Preparing your application: Your broker will already know the documentary evidence required and can help you gather all of this information to ensure your application has the best chance of approval.
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Maximise your chance of mortgage approval with a specialist in self-employed mortgages
What supporting evidence will you need to provide?
The main things mortgage lenders want to see are your self-assessment tax returns, or SA302s, and tax year overviews. You should have these for each year you’ve been self-employed and they can be downloaded from your HMRC portal.
Other documents you could be asked for – and should prepare just in case – include:
- Finalised accounts for the years you’ve been self-employed
- Income projections for the year ahead
Sidenote: If these two pieces can be verified by an accountant, they’ll be looked upon more favourably by a lender.
- Business bank statements over the last 3-9 months
- Evidence of strong previous employment record via employment references
- Your CV
How much can you borrow based on two years’ accounts?
This will largely depend on what the lender believes you can afford. To calculate that, if you’re a sole trader or working in a partnership, they’ll look at the ‘total income received’ section of the two SA302s you’ve provided or else calculate your share of the net profit as found in your two years of accounts. If you’re operating as a director of a limited company, they’ll use the director’s salary and add on any dividends received. Some may also include any net profits.
Whatever the total income amount is, most lenders will then multiply that by 4 to 4.5 times to get an approximate idea of what you could afford to borrow. Certain lenders may be willing to loan 5 or even 6 times your earnings.
Try our mortgage calculator to get a rough idea of your maximum borrowing. Select ‘2’ from the dropdown menu for ‘Years trading’ to get started.
Self-Employed Mortgage Calculator
This calculator can work out your maximum mortgage borrowing if you're self-employed. Select your trading style from the drop-down menu, then enter your income and outgoings, and our calculator will do the rest.
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.
Additional eligibility criteria
If you only have two years’ accounts or less to support your mortgage application, it’s important to make sure you meet the rest of the general lending criteria as closely as possible.
In addition to the number of years of accounts you have, your application will be assessed based on the following factors…
- Your credit history: To temper the limited trading history, the ideal applicant would have a good credit history to demonstrate their reliability. However, there are some lenders who specialise in mortgages with bad credit for the self-employed while a broker might be able to advise on how to remedy bad credit.
- Your loan-to-value ratio (LTV): A bigger deposit size and lower LTV could also counter any perceived risk that comes with being self-employed and having so few years to demonstrate steady earnings. A 75% LTV would be good to aim for but some lenders offer 90% and even 95% mortgages.
- Your age: As long as you’re not nearing retirement, most lenders won’t query age. But should that time of life be approaching or if the mortgage term runs into it, the pool of lenders willing to loan to you may be smaller.
- Any debt you may have: Having debt doesn’t equate to an automatic rejection but it can affect the number of lenders who may be willing to accept your application. It will depend on the size and type of debt.
- The type of property you’re purchasing: If you’re looking at a standard property then there shouldn’t be an issue but if it’s a property of non-standard construction — think a house made of concrete or one with a thatched roof — you would need to approach a specialist lender.
I phoned Online Mortgage Advisor to obtain advice about accessing a self-employed mortgage and within 10 minutes they had explained my options very clearly and put me in touch with Laurie, who was absolutely brilliant and managed to get my husband and I an AIP within a matter of days.
Aaron and Lizzie have been absolutely…
Aaron and Lizzie have been absolutely amazing throughout. Our last broker gave up on us and told us we wouldn’t get a mortgage until my business had more years accounts next year but Aaron had such fabulous knowledge about the whole market and made sure we have ended up with a mortgage offer!
The help and service we received from start to finish was second to none. I've been self employed with only 1 years accounts but OMA put us in touch with our broker and this guy is a legend. Trust me, nothing was too much trouble. Narinda sorted everything We are signing for our house this weekend.
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Which lenders will consider your application?
While many high street lenders have the three years’ worth of accounts stipulation in place, there are some, such as Barclays, HSBC and Natwest that only require accounts for two complete tax years.
However, in this scenario, there’s likely to be more choice, competitive rates and flexibility among specialist self-employment mortgage providers. Kensington Mortgages only require applicants to have a year’s worth of trading history and is open to applicants with bad credit while Aldermore Bank also only requires a year’s worth of paperwork and will loan up to 85% LTV
More specialised lenders can typically be accessed much quicker via an intermediary which is why working with a broker can be beneficial.
Mortgage lenders eligibility criteria can change at any time. For up-to-date information and bespoke advice about which lenders you should consider, make an enquiry and we’ll introduce you to a mortgage broker with experience in this area.
Will the interest rates be higher?
Not necessarily. Interest rates don’t alter based on your employment status but what can change is the number of lenders willing to consider your application.
If you’re able to prove that you’re a reliable borrower and the other areas of your application are solid, there’s no reason why your mortgage rate would be prohibitive. The table below provides an illustration of the rates currently available.
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 October 2023
Please note that the above rates were accurate at the time of writing, but are always subject to change. Speaking to a mortgage broker is the best way to find the most up-to-date deals.
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Government schemes available
Being self-employed for two years or less doesn’t stop you from accessing some of the government schemes for mortgage applicants. You could explore:
- Shared Ownership: Through this scheme, you’d purchase a portion of a property but own it jointly with either a housing developer or local council. It’s a good solution if you can’t afford the whole of the property but can afford between 10% and 75%. You’d then pay your mortgage and a small amount in rent for the remaining portion to the other owner with the plan to purchase a bigger share over time. While you need to have a 5% deposit, if you are self-employed you can qualify as long as you earn less than £80,000 (or £90,000 if based in London).
- Help to Build equity loan: If you’d like to build your own home, the government can help. In parallel to your mortgage, you’d apply for a government loan that would cover the costs of between 5% and 20% of the land or the estimated cost of construction of the home. This comes with a £1 a year fee and interest after a five-year period.
With each of these schemes, the difficulty will lie in finding a lender that facilitates the scheme, offers mortgages to the self-employed, and accepts less than three years of self-employment paperwork. This can be tricky but not impossible with expert help.
Speak to a broker specialising in self-employment
Getting a mortgage when you’re self-employed can be challenging enough. Doing so without three years’ tax returns can amount to an even bigger challenge and an even higher likelihood of rejection. That doesn’t have to be the case though. Working with a mortgage broker can ensure you apply only to a lender likely to say yes and that you submit an application that meets all other requirements. From the free first-timer’s consultation to completion, they’ll be on hand to ensure you get the best mortgage possible.
Call 0808 189 2301 or fill out our enquiry form to be matched with a specialist today.
Speak to an expert
Maximise your chance of mortgage approval with a specialist in self-employed mortgages
Just like looking for a mortgage with only two years’ accounts, it’s possible but there will be fewer lenders you can apply to. A specialist broker could share which lenders are open to such applicants.
See our article on self-employed mortgages based on one year’s accounts for more information.
An accountant can be helpful in compiling the necessary paperwork and their verification of documents can strengthen an application but it’s not vital to have one, even if you’ve only been self-employed for two years or less.
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