There are several steps you can take to increase your chances of getting accepted for a self-employed mortgage:
- Save for a bigger deposit: As with any type of mortgage, the more you can save up for a deposit, the more likely you are to get accepted for a mortgage and secure the best interest rates
- Check and improve your credit score: Before applying for a mortgage, check your credit score by using one of the fee-free services available online. Lenders use your credit score to determine how reliable you are as a borrower, so the better it is the more likely you are to get accepted
- If your credit score is poor, take steps to improve it such as checking you’re on the electoral roll, paying bills on time, spacing out credit applications and correcting any mistakes on your credit report
- Get your paperwork in order: It’s important to ensure your accounts are up to date and have ideally been prepared by a qualified accountant before you apply. Ideally, you’ll need at least two years’ worth of accounts.
Frequently Asked Questions
Who counts as self-employed?
Generally, lenders will view you as self-employed if you own more than 20% to 25% of a business from which you earn your main income. You could be classed as a contractor, sole trader, or company director.
Is it harder to get a mortgage when you’re self-employed?
It can be. But providing you have sufficient proof of income, a good credit score and a large deposit, you should still have a good chance of getting accepted.
Do the self-employed pay higher mortgage rates?
Not necessarily. So long as you can provide adequate proof of your income, you should have access to the same mortgage rates as everyone else. You’re more likely to secure the best rates if you have a good credit history and large deposit.
If you’re struggling to get accepted by a mainstream bank, however, you may have to apply with a specialist lender which may charge higher rates.
What can I do if I don’t have two years of accounts?
You may find it harder to get a self-employed mortgage if you don’t have two years of accounts. But your application may still be considered by certain lenders, particularly if you can prove you have already received regular work or that you have regular work lined up in the future.
It’s worth speaking to a mortgage broker to see if they can advise on lenders that may be more willing to accept those newly self-employed. If not, you may need to approach a specialist lender.
Do self-certification mortgages still exist?
No – self-certification mortgages were banned from the UK market in 2014.