Best self employed mortgage deals

What is a self employed mortgage?

There’s no special “self-employed mortgage” product, it just means applying for a standard mortgage while working for yourself. For the purposes of a self-employed mortgage, lenders will usually class you as self-employed if you own more than 20% to 25% of a business, and that business serves as your main source of income.

The key difference is how lenders check your income. Instead of payslips, they’ll usually ask for your accounts, tax returns and SA302 forms. They want to see that your income is reliable, even if it goes up and down.

Whether you’re looking for a fixed rate, tracker, offset or interest-only mortgage, there are plenty of deals out there that suit self-employed borrowers.

Why choose a self employed mortgage?

A self-employed mortgage is designed to take your full income into account, even if it comes from different sources. That includes:

• Sole traders using net profits
• Limited company directors (salary + dividends)
• Contractors with short or rolling contracts
• Freelancers with multiple clients

The main benefits are:

• Access to a wide range of mortgage deals
• Specialist lenders who understand self-employed income
• Flexible documentation requirements (with the right advice)

How self employed mortgages work

Lenders will want to know:

• How much you earn
• How stable your income is
• What your outgoings are
• How long you’ve been trading

Lenders generally prefer that your accounts have been prepared by a registered accountant. If you have less than two years’ accounts, you should still prepare as much as you can with proof of your earnings and upcoming contracts, as well as your accounts for the last year.

• SA302 forms and tax year overviews
• Full accounts (ideally from a chartered accountant)
• Bank statements
• Details of regular work or contracts

Most lenders will want to see at least two years of income records when you apply. They’ll also expect your most recent tax year to be no more than 18 months old at the point of application. This means that once we move into a new tax year, many lenders will no longer accept income evidence from two tax years back. To avoid delays, it’s a good idea to have your latest tax return completed and ready to share.

That being said, not all lenders require two years of earnings for you to qualify for a mortgage, so you may still be able to secure a good deal even if you’re recently self-employed.

Who can get a self employed mortgage?

If you’ve been self-employed for at least 12 months and can prove your income, you’ve got options. You’ll usually need:

• A good credit history
• A deposit (the more the better)
• Accurate, up-to-date financial records

Limited company directors might need to show both salary and dividends or even retained profits depending on the lender. Contractors may be asked to show daily or hourly rates, plus contract history.

We can help make sure your income is shown in the best possible light.

How to find the best self employed mortgage deals

Getting a mortgage when you're self-employed isn’t impossible, it just needs a bit more planning. We work with over 90 lenders and have experience matching self-employed clients with the right deal.

Some lenders specialise in self-employed mortgages and look at the full picture, not just your headline numbers. Others may have stricter criteria, so it’s important to apply with the right one.

Use our online mortgage finder to check today’s best deals or speak to an adviser for tailored support.

Making repayments on a self employed mortgage

Once your mortgage is set up, your repayments work the same as anyone else’s. You can choose a fixed rate if you want stable monthly payments, or a variable or tracker deal if you’re happy with a bit more flexibility.

Offset mortgages can also be useful if you keep savings in the bank, especially for tax planning or cash flow.

If your income changes or you want to remortgage in future, we’ll be here to help again.

Self employed remortgage

The remortgage deals for self employed that are available to you will vary depending on a few things, including how long you’ve been working for yourself.

If you were already self employed

If you were self employed when you got your original mortgage, then you should be in an excellent position to remortgage with a new lender, as long as your financial circumstances haven’t drastically changed.

When you remortgage, the new lender will carry out all the same checks as your original lender did. They’ll review your credit score, expenses and income - and if you’re still in the same financial position as when you took out your mortgage, you should have plenty of remortgage deals to choose from.

If you weren’t self employed when you got your mortgage, but have been working for yourself for a while

If you’ve become self employed since you got your mortgage, you should still be able to get a remortgage if you have at least two years of accounts to prove your income.

Lenders want to see consistency in your earnings so prefer to see two or three years of records. However, some lenders have remortgage deals for self employed if you have only one year of records. Our expert mortgage advisers at L&C can help you find the best lenders for your remortgage based on your specific circumstances.

If you’re newly self employed

Remortgaging when newly self employed can be more difficult. If you’ve been working for yourself for less than a year, you may not be able to remortgage with a new lender, but it could be possible for you to switch products with your current lender.

Again, our expert advisers can review the options available to you and help you to understand whether you can remortgage with a new lender or if it would be better to get a new deal with your current lender.

Apply for a self employed mortgage with L&C

Getting a self employed mortgage doesn’t have to be difficult. Here at L&C, we’ve got all the specialist knowledge you need to ensure you get the best self employed mortgage.

Our expert advisers are on hand to talk you through all the available options, and to support you through the application process. Our service won’t cost you a penny, so get in touch with us now to find the right mortgage for you.