The Self-Employed Mortgage Guide

There is no such thing as a self-employed mortgage. There are ordinary mortgages, assessed by lenders who calculate self-employed income in strikingly different ways — and the gap between the most and least generous is often the difference between buying and not.

Four situations, four assessments

• Sole traders — net profit, usually averaged over two or three years
• Company directors — salary plus dividends, or salary plus a share of retained profit
• Contractors — often the day rate annualised, with accounts largely set aside
• Newly self-employed — a smaller group of lenders will work with one year

The retained profit point

This is where the largest differences appear. A director who leaves profit in the company for sound tax reasons will be judged by most lenders on income they deliberately did not take. A lender that considers your share of retained profit can transform what is achievable on identical accounts. Knowing which lenders operate that way is most of the value in advice here.

What to have ready

• Two to three years of finalised accounts, or SA302s with tax year overviews
• Business bank statements, usually three to six months
• Personal bank statements
• Your accountant details — many lenders approach them directly
• For contractors, a copy of the current signed contract

Plan a year ahead if you can

The most tax-efficient way to pay yourself and the most mortgage-friendly way are rarely the same. If borrowing is likely within a year or two, that trade-off is worth discussing with your accountant while there is still room to act on it. Once the accounts are filed, the figures are the figures.