Self-Employed Mortgages UK — Expert Advice for the Self-Employed

Being self-employed doesn't mean getting a mortgage has to be difficult — but it does mean you need a broker who understands how lenders assess self-employed income. At Kris @ CMME, we specialise in exactly this.

The biggest challenge for self-employed applicants is proving income. Employed applicants simply provide payslips, but self-employed income can be more complex — especially if you're a limited company director taking a mix of salary and dividends, or a contractor with day rates.

Different lenders assess self-employed income in different ways. Some look at your net profit, others at your salary plus dividends, and some will even consider retained profits within your company. Knowing which lender uses which method — and which is most favourable for your situation — is where our expertise makes the difference.

Most lenders will require at least two years of accounts or tax returns, though some will accept just one year. Here's what you'll typically need:

SA302 tax calculations — These are your tax year overviews from HMRC. They show your total income and tax paid for each year. You can download them from your HMRC online account.

Tax year overviews — These confirm the figures on your SA302s. Again, available from your HMRC account.

Company accounts — If you're a limited company director, lenders will want to see your most recent 2-3 years of accounts, prepared by a qualified accountant.

Bank statements — Usually 3-6 months of personal and sometimes business bank statements to verify your income and spending patterns.

Accountant's reference — Some lenders accept a reference from your accountant confirming your income, which can speed up the process.

This is where it gets interesting — and where the right broker can make a huge difference to how much you can borrow.

Sole traders and partnerships — Most lenders use your net profit (after expenses, before tax) averaged over the last 2-3 years. Some will use just the latest year if it's higher, which can work in your favour if your income is growing.

Limited company directors — This is where lender criteria varies most. Some use salary plus dividends only. Others will add back retained profits, directors' loans, or other company income. If you're a director who retains profits in the company rather than drawing them as dividends, we can find lenders who will recognise this additional income.

Contractors — Many lenders now have specific contractor policies that calculate income based on your day rate rather than your tax returns. This can significantly increase your borrowing power, as contractors often show lower income on their tax returns due to legitimate tax planning.

Keep your accounts up to date — Lenders want to see the most recent figures. If your accounts are more than 18 months old, some lenders may not accept them.

Don't over-minimise your income — While tax efficiency is important, remember that lenders can only lend based on what they can see. If you're planning to apply for a mortgage, discuss this with your accountant beforehand.

Maintain a clean credit record — This is important for everyone, but especially for self-employed applicants who already face additional scrutiny.

Save a healthy deposit — A larger deposit gives you access to better rates and more lender options. Aim for at least 10-15% if possible.

Speak to us early — We can advise you on what lenders will need and help you prepare, even if you're not ready to apply for several months.