I wouldn’t say it’s harder to get a mortgage if you’re self-employed, but it’s less straightforward than for an employed person. You’ll find that lenders will ask you for more documentation. They’re potentially going to look at your income a little bit more closely, compared with an employed person who will just have to provide payslips and maybe some bank statements.
One of the outcomes of Covid last year was that it took a while for mortgage providers to start lending to more self-employed clients. There were minimum deposit restrictions in place. Some lenders still have these – they will ask for a 25% deposit if you’re self-employed.
But most are going back to the norm now.
Lenders vary in terms of how much they will lend self-employed people and the type of self-employed clients they will accept. That just means you need to do a bit more research before you apply to a lender.
What if I only have one year’s accounts?
You should still be able to get a mortgage with just one year’s accounts. The majority of lenders usually want two years’ history as self-employed, but some will accept a year’s self-employed income.
There are even lenders who in some scenarios would accept the self-employed from day one. For example if someone who had one year’s accounts as an accountant decided to be a self-employed builder, they might struggle because there’s no work experience history. But an employed accountant moving to become a self-employed accountant is more likely to be accepted with a year’s accounts.
Imagine a doctor that has worked for the NHS for five years is buying into a local, established practice. Many lenders would consider that from day one because the practice already has history. So it is definitely possible to get a mortgage with one year’s accounts, and sometimes less.
As brokers we’re here to help. We’ve got a really good understanding of which lenders are most suitable for every type of client.
