How to Get a Mortgage When You Are Self-Employed
We understand the challenges self-employed individuals face when applying for a mortgage. Unlike traditional employees with fixed salaries, self-employed professionals often need to provide additional proof of income. As specialists in self-employed mortgages, we can guide you through the process, ensuring you secure the best deal for your unique financial situation, whilst placing you with the right lender to maximise your borrowing potential.
Self-Employed Mortgage Requirements
Lenders assess self-employed applicants differently from salaried employees. The key factors they consider include:
- Your trading history (typically a minimum of one to two years)
- Your net profits (for sole traders)
- Your companies net profits + salary or salary plus dividends (for limited company directors)
- Your credit history and overall financial stability
Choosing the right lender is crucial, as different lenders will assess your income differently. Here’s what you need to know based on your business structure.
Sole Traders
Sole traders often find obtaining a mortgage challenging, but with the right advice, the process becomes much smoother. Lenders primarily assess sole traders based on their net profit as stated on their Tax Calculation (formerly SA302). Here are the three main ways lenders evaluate income:
- Two-Year Average: Most lenders will average your net profit over the last two years to assess affordability.
- Latest Year’s Figures: Some lenders consider only the most recent tax year, which is beneficial if your income has increased.
- Accountant’s Projection: A few lenders may accept an income projection from a suitably qualified accountant, offering additional flexibility.
Working with a mortgage specialist ensures you find a lender that aligns with your financial profile, increasing your chances of approval.
Contact us if you are sole trader looking to secure a mortgage, so we can place you with the right lender for your income structure.
Limited Company Directors
Limited company directors have more flexibility, as different lenders assess income in varying ways. Here are the three main methods:
- Salary + Dividends: Lenders assess the total of your director’s salary and dividends, as shown on your annual tax calculations.
- Net Profit (After Corporation Tax) + Salary: This method considers the company’s net profit after taxes, plus your salary.
- Net Profit (Before Corporation Tax) + Salary: Some lenders evaluate net profit before tax, which benefits directors who retain profits within the business.
Key Considerations for Limited Company Directors
- Some lenders average two years of income for consistency.
- Others will assess only the latest year’s earnings.
- A few lenders accept an accountant’s projection for future earnings.
If you retain profits in your company and take a lower salary, choosing a lender that considers net profit before tax can maximise your borrowing potential.
Contact us if you are limited company director looking to secure a mortgage, so we can place you with the right lender for your income structure.
CIS Contractors
For CIS contractors, securing a CIS contractor mortgage can be far more achievable than many think. The key advantage of applying for a mortgage as a CIS subcontractor is that lenders can assess your gross income rather than your post-expense, taxable income. At Quanstrom Financial, we specialise in helping CIS contractors secure the best mortgage deals by working with CIS-friendly lenders who fully understand how your income is structured.
Click here to view our article on CIS Contractors
Contact us if you are CIS Contractor looking to secure a mortgage, so we can place you with the right lender for your income structure.
How We Can Help
Securing a mortgage as a self-employed individual can be complex, but we are here to simplify the process. We specialise in self-employed mortgage solutions, ensuring you find a lender that understands your financial situation and offers the best terms.
Why Choose Us?
✅ Expertise in self-employed mortgage applications
✅ Access to lenders who cater specifically to business owners
✅ Tailored advice to maximise your borrowing potential
If you’re self-employed and looking for a mortgage, get in touch today and let us help you find the best solution!
📞 Need mortgage advice? Call 01323 364432
📧 Email info@quanstromfinancial.co.uk
