How to get a mortgage if you're self-employed

Creative freedom, independence and job satisfaction. If you're self-employed, you'll know that these are just a few benefits of working for yourself.

But it can be tricky to get a mortgage when you're your own boss. Thankfully, there are plenty of tips that can make it easier. Continue reading to discover the best way to get a mortgage if you're self-employed. Find out how to prove your income and what you need to apply for a mortgage successfully.

Why is it difficult to get a mortgage if you're self-employed?

Having a healthy deposit and a good credit history will help your chances of securing a mortgage if you're self-employed. But because you don't have an employer, it's harder for you to prove your income with a simple set of payslips.

Consequently, self-employed people and freelancers have to provide more paperwork than other borrowers. First, let's see how to prepare for your mortgage application, then we'll look at which documents you’ll need.

How to get a mortgage if you’re self-employed

A successful mortgage application can take a while to get right. That's because you'll need time to save more money, collect historical paperwork and remove any roadblocks. Here are a few steps you can take now to increase your chances of getting a mortgage:

Invest in mortgage advice

Despite there being an avalanche of free mortgage information available, it's best to get tailored advice. A good, independent mortgage broker will do most of the hard work for you. They'll take your circumstances into account, calculate your affordability and give you the best options.

Get your accounts certified

Lenders also prefer self-employed mortgage applicants to provide accounts that a certified accountant has prepared. That way, they can be sure of your reliability. An extra pair of qualified eyes gives the lender more confidence in your application.

Save as much as you can for a deposit

The more money you have upfront, the less you need to borrow. So if you're receiving cash gifts from family or selling any valuable assets, it’s best to do this now.

Check your credit score

It's always worth checking your credit score to see if there’s room for improvement. The better your credit score, the better your chances of securing a favourable mortgage.

If your score isn't great, you'll want to give yourself enough time to improve it. For example, repaying more than the monthly minimum on your credit card is one of many ways to boost your credit score.

Get on the electoral register

Having your name on the electoral register means you have the right to vote in local and general elections. But it also helps lenders verify your UK proof of address and identity. Plus, it can make you appear more settled if you've been at the same address for a while.

What documents do I need to apply for a mortgage?

To prove your income when you apply for a self-employed mortgage, you'll need to provide the following:

• At least two years of certified accounts

• An SA302 form from HMRC for the past two or three years

• Evidence of upcoming work or freelancer contracts (for contractors)

• Proof of dividend payments or retained profits (for company directors)

Lenders will likely focus on the average profit you've earned over the past few years. If you only have records for less time than that, your choice of mortgages may be limited.

As well as providing evidence of your income, you'll also need to provide a recent or valid:

• passport

• driving licence

• council tax bill

• utility bills

• bank statements

Lenders will examine your bank statements to see your other expenses such as:

• food and clothing

• travel and commuting costs

• childcare

• holidays

• socialising

• credit card and store card repayments

• loan repayments

• car finance agreements

Relevant resources

• Getting a mortgage as a new business owner

• Lunch and Learn: Secure the best deal on your next mortgage as a freelancer