Over 4.3 million self-employed people run businesses in the UK. But despite their importance, 75% have considered abandoning self-employment to improve their chances of securing a mortgage.
However, while many lenders favour more ‘traditional’ borrowers, getting a mortgage as a self-employed business owner is absolutely achievable.
In this article, we’ll explain what a self-employed mortgage is, how it works, the documents you’ll need to apply, and ways to improve your chances of landing a loan.
In a nutshell: Getting a mortgage when you’re self-employed is entirely possible, but you’ll need to prepare more than salaried employees. Lenders assess your reliability based on proof of stable income, so you’ll need to provide at least 2-3 years of certified accounts, SA302 tax forms, and bank statements. You can boost your chances of being approved by having a strong credit score, minimising your outgoings, and saving a larger deposit. Specialist lenders and mortgage brokers often understand the nuances of self-employed finances better than high-street banks, so it’s worth shopping around and seeking expert advice.
What is a self-employed mortgage?
A ‘self-employed mortgage’ is a commonly used term to describe mortgages for people running their own businesses and working for themselves.
But a term is all it is. There’s no specific ‘self-employed mortgage’ just like there’s no dedicated ‘employed mortgage’. There are only mortgages, and working for yourself doesn’t restrict you to a certain type of product or interest rate.
What counts as self-employed when applying for a mortgage?
Lenders will class you as self-employed if you own more than 20% of a business and generate the majority of your income from that business.
You can be a sole trader, director of a limited company, member of a partnership or a contractor to be classed as self-employed.
If you’re self-employed but also earn money through PAYE, it’s important to make the lender aware of your income and ask them to take all earnings into account.
Is it more difficult to get a mortgage when you’re self-employed?
At its core, a mortgage approval depends on whether you can realistically repay the loan. Lenders assess this by looking at your earnings, spending, and income stability. For employees, this is simple – they provide payslips and a P60, showing a steady salary. But for the self-employed, income fluctuates, taxes are paid irregularly (rather than deducted automatically), and expenses vary. All of this makes it trickier to predict affordability, and it’s why self-employed borrowers often face extra scrutiny.
Top tip: One of the best ways to prove you’re a reliable businessperson is by effectively managing your expenses. Expense tracking gives you a complete understanding of how you are spending your money, which helps you make better decisions and ultimately improve your cash flow. To learn more, read our guide to how to keep track of expenses 🌟
What are the new mortgage rules for self-employed people?
Mortgage lenders have traditionally tended to favour the predictable income of salaried employees, leaving freelancers and contractors at a disadvantage. But the Financial Conduct Authority (FCA) is planning to introduce a series of reforms designed to make the process fairer and more flexible for people with variable incomes.
Here’s what’s it could mean for you:
Pay your mortgage in larger, less frequent instalments
Use your rent payment history to strengthen your application
Access interest-only mortgages more easily
Overcome past credit issues more smoothly
Benefit from tech-driven mortgage decisions that look beyond standard criteria
These changes won’t be implemented at the same time, but the first is expected to be in place by the end of 2026.
Everything you need to know about applying for a self-employed mortgage
Applying for a mortgage when you’re self-employed can feel a bit more complicated than it does for someone in regular employment. But preparation is the key to success!
What do I need to apply for a mortgage?
With your business and personal finances in order, you’re in a good position to put forward a solid application.
The method will differ depending on your business structure (ie how you register your business), but most lenders will ask for the following documents:
Identification: A photo ID such as a passport or driving licence that includes your current personal address.
Proof of address: A paper utility bill, council tax bill, or bank or credit card statement that matches the address on your ID.
A completed SA302 form: This shows your tax year overview and earnings from your most recent Self Assessment tax return, proving up to four years of earnings (though most lenders only ask for 2-3 years). You can print it from your HMRC account or contact HMRC directly for an official covering letter if required.
Proof of income: This varies by lender but will include either profit and loss reports, balance sheets and bank statements, or an Accountant’s Certificate signed by a certified accountant. Accountant’s Certificates are used where SA302s don't fully represent income – for example, if you’ve retained profit in your company rather than taking it as dividends.
Proof of deposit: Provided as a bank statement.
Proof of outgoings: Lenders will ask for a completed expenditure form to carry out an affordability assessment. This includes all regular monthly outgoings such as bills, loan payments, subscriptions, childcare costs, insurance and pension contributions.
Bank statements: Paper statements covering 3-6 months of salary, business banking and rental payments.
Life insurance policy: A life insurance policy must be in place to cover the mortgage in the event of death. Your policy summary acts as proof of this.
How much can I borrow on a self-employed mortgage?
Most lenders calculate your borrowing power by applying an income multiple – usually 4 to 4.5 times your annual net income. But this can vary. Some specialist lenders might stretch this to 5 or even 6 times your income, if you have strong finances. For example, if you earn £60,000 a year, a mainstream lender might offer £240,000-270,000, while a specialist lender could potentially offer up to £360,000.
How will a lender calculate my self-employed mortgage earnings?
Lenders approach this differently, depending on your employment type:
Sole traders: Lenders will usually look at your net profit (after business expenses but before personal tax and National Insurance) and average it over the last 2-3 years of your SA302 tax forms. If your income has been rising, some may focus on your most recent year.
Partnerships: Lenders will consider your share of the net profits, again averaging it over the last 2-3 years to account for any variations in earnings.
Limited company directors: Lenders may calculate your income as salary + dividends (sometimes up to 125% of dividends), or they might use retained profits (net profit + salary - dividends/Corporation Tax). A few may even consider your gross income before tax.
How do I prove my income for a mortgage when self-employed?
Ultimately, lenders want to see stable earnings. You can prove your income by providing:
SA302 tax calculation forms and tax year overviews for the last 2-3 years (download them from your HMRC personal tax account)
Fully signed accounts, including profit and loss statements and balance sheets, prepared and certified by a qualified accountant
3-6 months of personal and business bank statements to show consistent income (keep your personal and business finances separate), although some lenders may ask for up to 12 months
An Accountant’s Certificate if your SA302 forms don’t fully reflect your income (eg if you have retained profits or dividends)
Additional supporting evidence, like contracts, invoices, or a letter from your accountant, to explain any income fluctuations or seasonal variations
How to apply for a self-employed mortgage
1. Maintain a good credit score
Lenders will check your credit score to assess your reliability. A higher score improves your chances of approval. Your score is affected by past credit management, current debts and credit usage, recent credit applications, and public records like electoral roll registration. You can check your score using a service like Tide’s Credit Score Insights. If you have bad credit, you’ll want to try and improve it before applying. To improve it, avoid multiple credit applications in a short time, set up direct debits for bills, clear your credit card balance in full each month if possible, close unused accounts, and register to vote. If you’re applying as a limited company, lenders might also check your business credit score. For more details, read How do I check my business credit score in the UK?
2. Stay on budget
Lenders will review your income and expenses to determine your affordability. Your disposable income after monthly costs affects both your eligibility and how much they’ll lend. So in the months before applying, keep your outgoings to a minimum, cut back on lavish spending, and try to pay any outstanding loans or credit card balances. The best way to stay on top of your business spending is to create and maintain a business budget.
3. Get your accounts in order
Most lenders require 2-3 years of certified accounts to prove your income. If you don’t have this, some lenders may accept one year’s accounts, but you might also need a bigger deposit. If you’re planning to apply soon, find a trusted accountant who can also produce SA302 forms and complete an Accountant’s Certificate if needed. Check out our guides on how to choose an accountant for your small business and getting an online accountant for your small business.
4. Check the lender's requirements
Lenders can be more cautious with self-employed applicants since incomes can vary. Some use Automated Income Verification, while others rely on SA302 forms and business accounts. Fortunately, you’ll have access to the same mortgage deals as employed people – fixed-rate, variable-rate, and interest-only mortgages. Bear in mind that some lenders average your income over several years, retained profits might be considered for limited company directors, and bank statements can show consistent income patterns. Self-employed workers make up about 13% of the workforce but only get around 7% of mortgage approvals, so find a lender that understands self-employment.
5. Compare the market
Not all mortgages are created equal, so compare what's available. Use online comparison sites, or work with a mortgage broker. When comparing deals, consider the interest rates (fixed offers stability, variable might start lower), fees (arrangement, valuation, early repayment charges), loan-to-value ratio (bigger deposits typically get better rates), and flexibility (overpayments or payment holidays).
6. Choose a mortgage broker or apply directly
If you’re confident with finances, you could apply directly with the lender. But a broker can often access deals you won't find yourself, handle all the paperwork, present your case compellingly to the lender, and answer any questions you may have. Some brokers charge fees while others rely on referral fees from lenders. There shouldn't be any quality difference between paid and fee-free brokers.
7. Get an Agreement in Principle
An Agreement in Principle (also called a Decision in Principle or Mortgage in Principle) shows estate agents you’re serious about buying. It’s not a guarantee but indicates how much a lender would theoretically lend you. You can usually get one online in minutes through a soft credit check that won’t affect your score. Most AIPs last 30-90 days, so time it carefully.
8. Get your paperwork ready
Having everything organised will make the application process smoother. You’ll want to prepare your proof of identity, proof of address, business accounts, SA302 forms, bank statements (usually 3-6 months’ worth), and tax returns if requested. Keep digital copies of everything, for your own reference, and double-check all details are correct to avoid delays.
9. Submit your application
Once you’ve found a lender and property, submit your application directly or through a broker. The lender will then value the property, carry out final checks (income, credit, etc), and either issue a mortgage offer, request more information, or reject the application. Offers usually last 3-6 months, so you’ll need to move swiftly.
Find the right mortgage with Tide
Answer a few simple questions to compare quotes from our panel of mortgage lenders. If you’re eligible and happy to proceed, we’ll even connect you with a broker from our vetted network who can help you apply.
Applying for a mortgage as a sole trader
If you’re a sole trader, all of the net profits in your business belong to you. This makes it easier to prove your earnings. Lenders will look at your income for the past 2-3 years to work out your average income.
Before applying for a mortgage, ensure you have two years’ worth of full, finalised accounts and two years of SA302s, ending within the last 18 months.
Applying for a mortgage as a limited company director
If you run a limited company, your business is a separate entity and individual profits are separate from business profits.
Lenders will focus on income from your basic salary as well as dividend payments, so ensure you have completed records for both going back 2-3 years.
Some lenders may also consider retained profits as part of your income. Using retained profits allows you to boost your income without having to pay yourself in dividends (and increase your tax bill as a result). However, before taking this approach you should check with the lender first as this isn’t always an option.
Applying for a mortgage as a partnership
If you operate as part of a business partnership, lenders will look at your share of the profits only.
You’ll need to prove income for 2-3 years in the form of partnership accounts and personal SA302s, ending within the past 18 months. Lenders will average out your profit over the period.
Applying for a mortgage as a contractor
If you’re a contractor or a member of the Construction Industry Scheme (CIS), where money is deducted from your payments for advance payments towards tax and National Insurance, lenders will process your application in the same way as a sole trader. However, you’ll also need payslips from your employer or client dating back six months.
How to improve your mortgage chances
We’ve talked about getting your finances in order, managing your credit rating, balancing your budget and gathering the correct documentation. But in order to truly impress lenders, self-employed individuals need to go the extra mile.
Here are five tips for improving your mortgage chances even further:
1. Speak to a mortgage advisor
A mortgage advisor can help you choose the right lender for your needs. Since each lender has different criteria, their expertise can boost your approval chances and avoid delays. Advisors vary in what they offer – some are tied to specific lenders, others provide 'whole of market' advice. Fees also vary, from fixed fees to percentage-based charges, or nothing if they earn commission from lenders. Regardless, they're required by the FCA to recommend the most suitable mortgage for you.
2. Save up a large deposit
The bigger your deposit, the better your chances of securing the loan you need. According to Which?, you'll typically need at least 5% of a property's value – so for a £200,000 property, that's £10,000. The lender would then lend the remaining 95% (£190,000). But if you can save more than 5%, you'll benefit from cheaper monthly repayments and increase your chances of acceptance. Use a mortgage repayment calculator to work out how much deposit you'll need based on what you can afford.
3. Maintain good business relationships
Lenders expect to see a good track record and will look favourably on guaranteed future work. If you provide services to clients, try to secure long-term contracts or retainer arrangements. These prove you can maintain or increase your income going forward.
4. Sign up to the electoral register
Signing up to the electoral register will not only help improve your credit score, but it will also give your mortgage chances a boost. Lenders use the electoral register in their background checks to verify your identity and address. Make sure you're registered to vote at your current address by contacting your local council. If you have concerns for your privacy, ask that you're only added to the register that isn't publicly viewable.
5. Compare mortgage deals
Not all mortgages are equal, and finding the right one could save you thousands. Compare interest rates (fixed vs variable), fees (arrangement, valuation, early repayment charges), loan-to-value ratios (lower LTV typically means better rates), flexibility (overpayments, payment holidays, portability), and lender reputation. You can use online comparison tools like MoneySuperMarket and Compare the Market to quickly compare deals from a wide range of lenders. If you’re looking for other forms of property finance, Tide can help you explore your options.
Remortgaging if you're self-employed
Remortgaging lets you use the equity in your property to switch to a more competitive deal, release cash (equity), or avoid lapsing onto a higher interest Standard Variable Rate (SVR). You may want to do this a few months before the end of your initial mortgage term (usually 2-5 years) to avoid early exit fees.
The process when you’re self-employed is almost the same as if you were in regular employment, but you’ll need to provide the lender with some extra documents:
SA302 forms and tax overviews (last 2-3 years)
Accountant-certified accounts (profit/loss statements)
Bank statements (3-12 months)
You can remortgage directly with a lender, including your existing lender if you prefer. Or you can use a mortgage broker. Either way, you’ll want to compare a range of options to make sure you get the most suitable deal on the market.
💡 Expert insights
Simon Butler has worked with mortgage lenders, industry bodies and independent professionals for over 15 years, and was previously Head of Mortgage & Protection at CMME. So we asked him what some of the unique challenges are with getting a home loan when self-employed.
Here’s what he told us:
Gaps over eight weeks between contracts can be a problem for contractors, and lenders handle this differently. Some may accept breaks for professional development or major life events, but it’s best to check first.
If you work under an umbrella company, lenders look at your last three months of payslips, contracts and bank statements. Applying after a break could hurt your chances because lower income during that time reduces what you can borrow.
First-time PAYE fixed-term contractors may find that many lenders won’t consider a mortgage application until you’ve completed 12 months on contract. Some lenders might accept applications after just three months if you have at least two years of experience in a similar job.
Lenders often focus on your income during the first year of the pandemic. Some will let you use 2019 accounts alongside recent years to show your normal income, which helps since they usually average income over 2-3 years.
If you used the SEISS grant or a bounce-back loan, lenders might treat these as personal funds, which could lower how much you can borrow.
Most lenders want to see 2-3 years of trading accounts and tax overviews. A few might accept just one year if you have previous experience in your field.
Some lenders will consider a director’s share of company net profit plus salary when calculating how much you can borrow, which can significantly increase the amount available.
Wrapping up
Getting a mortgage when you’re self-employed may feel daunting, but with the right preparation and approach, it’s absolutely achievable. The key is to demonstrate financial stability and reliability, just as you would in running your business.
Here’s a reminder of the key points:
Providing at least 2-3 years of certified accounts, SA302 forms, and bank statements helps lenders assess your earnings confidently
A strong personal and business credit history (built by paying bills on time, reducing debts, and avoiding unnecessary credit applications) can boost your chances of approval
Keeping your outgoings under control, saving for a larger deposit, and keeping your financial records organised can reassure lenders of your reliability as a borrower
Comparing mortgages using brokers, comparison sites, or looking at each lender directly helps find the most suitable deal for your specific situation
Specialist mortgage brokers can offer tailored advice and connect you with lenders who understand the nuances of self-employed incomes
Before you apply, use Tide’s Credit Score Insights to check and improve your business credit score. And when you’re ready to explore your mortgage options, view our property finance and commercial mortgages pages to understand your options and take the next step toward securing your property.
FAQs
Do self-employed people have to pay higher mortgage rates?
No, you shouldn’t have to pay higher mortgage rates if you’re self-employed. Lenders set rates based on assessed risk and affordability rather than employment status alone. If you can provide proof of stable income (via SA302s, accounts, and bank statements over 2-3 years), you should qualify for the same deals as people in regular employment.
How long do you need to be self-employed to get a mortgage?
There’s no fixed minimum time to be self-employed to get a mortgage. But lenders typically require 1-3 years of trading history to assess your income, and your options may be slightly limited if you’re unable to provide this.
What happens if I've got gaps in my work history?
Lenders will want to see stable income over a period of 1-3 years. Small gaps, of say 1-2 months may not cause a problem, but you may find it more tricky if you have longer gaps. A fee-free mortgage broker can provide guidance.
Will maternity leave impact a mortgage application?
Maternity leave doesn’t automatically disqualify self-employed mortgage applications. But you may need to provide extra evidence to show you can afford the loan based on your income before going on maternity leave and your expected income when you return to work.
Can I get a 95% mortgage if I'm self-employed?
Getting a 95% LTV (loan-to-value) mortgage when you’re self-employed is possible, but it can be a lot harder than for people in regular employment. Most lenders top out at 90% or lower for self-employed applications.
Is it worth paying for a specialist broker or lender?
If you’re self-employed, paying for a specialist broker or lender can be worthwhile. While many brokers offer free advice, specialists understand the nuances of variable incomes, retained profits, and shorter trading histories. Similarly, lenders that cater to self-employed applicants often assess affordability more flexibly – considering future contracts or business growth – unlike high-street banks. This expertise can make the process smoother and improve your chances of approval.
Can I get a guarantor mortgage?
Yes, you can get a guarantor mortgage if you’re self-employed, as it can offset any variability in your income by leveraging a family member's stable finances or assets.
Can I use shared ownership if I'm self-employed?
Shared ownership is open to self-employed people, just as it is to anyone else. You’ll just need to meet the standard eligibility criteria, which include having a household income under £80,000 (or £90,000 if you’re buying in London), not currently owning another property, and being able to prove a stable income.
Will IR35 affect my mortgage application?
If you’re inside IR35, lenders may treat your income like a salary, which makes it easier to prove affordability. This can actually work in your favour when applying for a mortgage, as lenders may view your earnings as more stable – similar to a PAYE salary. If you’re outside IR35, you’ll need to provide full self-employed documentation, like SA302 forms and business accounts.
Can self-employed individuals get a mortgage or a loan with bad credit?
It’s possible, but you’ll likely be charged higher interest rates and have to provide a larger deposit (20-30%+). You can improve your chances by working with a mortgage broker, showing stable income, and avoiding multiple applications that could harm your credit score further.
How long does getting a mortgage when self-employed take?
It typically takes 8-16 weeks from Agreement in Principle to completion – longer than a standard application, as lenders need to look at your income in more detail. Being prepared with paperwork and using a mortgage broker can often speed things up, but complex cases or delays can stretch timings further.
