Sole traders and partnerships mortgages

Self-employed borrowers have access to exactly the same range of mortgage products as everyone else. The key factor for you to consider is being able to prove you have the income necessary to make the repayments on the mortgage for which you’re applying.

With so many people now being self-employed, many customers unfortunately get the wrong information when applying directly to banks, building societies or indeed via some of the less skilled mortgage brokers on the market.

As a sole trader, lenders will want to know your net profit, which will almost always need to be evidenced by an SA302 from HMRC (from your self-assessment) or a tax calculation from your accountant. Both need to be supported by a tax year overview from HMRC.

Most mortgage providers will require a history of trading (in some cases up to 3 years) and will take an average of these figures or, if your profits have decreased, will use the lowest.

A good mortgage adviser will be aware of these limitations and will consider finding you a provider that will accept the following when assessing a sole trader or partnership income:

  • 1 years trading
  • Latest years figures
  • Reference from a qualified accountant

There are certain traps that self-employed mortgage applicants need to be conscious of. Your accountant will see it as part of his job to minimise your tax liability by using legitimate methods to reduce your taxable income – however, that could count against you when applying for a mortgage as it may look as though you couldn’t afford the repayments.

There may be some variation around the deposit that’s required based on your credit rating and the lender. You may also be able to find a lender who would consider your application if you have one year of accounts plus a projection, but these are in the minority.

Some stricter lenders may want to see a prediction of your future clients or contracts, to make sure you can afford your mortgage repayments.

Our specialist advisers will assess your income to achieve the maximum you can borrow at the best interest rate available and will also speak directly to your accountant (if required) to obtain the correct figures.

As a mortgage is secured against your home/property it may be repossessed if you do not keep up the repayments.

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Frequently Asked Questions

It’s a common misconception about the mortgage market that it’s now very difficult for self-employed people to get a mortgage. It’s true that the old self-certification mortgages are no longer available, however you do have access to the same variety of fixed and variable rate offers that all mortgage applicants have.

There are a handful of specialist lenders who offer products designed just for the self-employed. However, mainstream mortgage lenders do also lend to the self-employed and so you may not need to use a specialist. Let us help get the right mortgage for you.

Typically you’ll be required to have at least two year’s worth of accounts and/or tax returns to show to lenders – although some may require three years’ worth. We offer advice for 1 year’s accounts so get in touch to see how we can help you find a mortgage.

The amount you can borrow and the way it’s calculated depends on the lender, which is why it’s important to get professional advice so you can weigh up your options. Some lenders set the amount you can borrow based on your previous two or three years’ income, while others can calculate based on your previous year of trading.

If you are a director of a limited company, you may also be categorised as self-employed – depending on the lender and the share percentage you hold – approximately anything above 15-30% shareholding and you will be seen as self-employed in the eyes of a lender.

Had previous problems getting a mortgage?

If you have been told you are ineligible for a mortgage, speak to a specialist who can give you the help you need.

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