Self-Employed Mortgages: Your Questions Answered
If you run your own business or work as a freelancer, getting a mortgage can feel tougher than it should. Lenders do not see regular payslips, and your income might vary through the year. The good news is that thousands of self-employed clients secure mortgages every month. With the right documents, a clear explanation of your income, and a lender who understands your set-up, you can put forward a strong application.
This guide answers the most common questions we hear from sole traders, company directors, and contractors, and it sets out practical steps to improve your chances of approval.
How many years do you need to be self-employed?
Many high street lenders like to see two full years of trading, supported by SA302s and tax year overviews for sole traders or partnership returns, and accounts for limited company directors. That said, there are lenders who will consider one year, especially if your current role follows a similar line of work with a clear track record. A few specialist lenders also look at your latest year if it shows strong growth, but others will average the last two years. If your income has fallen year on year, expect lenders to use the lower figure.
Contractors are often assessed differently. IT contractors and some professionals can be underwritten on a day rate multiplied by a set number of weeks, provided you have at least three to six months’ history in contract roles and an ongoing or renewed contract.
Tip: file your tax return early, keep accounts up to date, and maintain a continuous trading footprint without long gaps. Lenders want to see stability and a realistic income pattern that can support the mortgage payments.
How much deposit do you need?
In broad terms, the minimum deposit for a residential purchase can be as low as 5% if your credit profile is clean and your affordability is strong. Many self-employed buyers choose 10% or more, which usually opens up a wider choice of lenders and can unlock better pricing. If you have any blips on your credit file or a shorter trading history, a higher deposit can make a real difference to both acceptance and rate.
Remember that your total upfront cost includes solicitor fees, valuation or survey fees, and potential product fees. Build these into your budget alongside your deposit.
How much can you borrow?
Affordability is not a fixed multiple. Lenders assess your income, commitments, and household bills, as well as dependants and future plans. For self-employed applicants, the key is what the lender counts as income:
- Sole traders and partners: net profit from your SA302s, usually averaged over the last two years, or the latest year if lower.
- Limited company directors: salary plus dividends is common, although some lenders will consider salary plus your share of company net profit, which can be helpful if you retain profits in the business.
- Contractors: an annualised day rate approach can yield a higher usable income, provided your contract history supports it.
Most lenders cap borrowing at around 4.5 times your assessed income, but higher multiples may be available for certain professions or stronger profiles. If you have higher unsecured debt, car finance, childcare costs, or sizeable commitments, your borrowing capacity will reduce. A detailed review with a broker helps present the right income figures and match you to lenders whose policies align with your set-up.
What counts as proof of income?
Expect to provide:
- Last two years’ SA302s and tax year overviews if you are a sole trader or in a partnership.
- Last two years’ full accounts for limited company directors, plus SA302s. Some lenders prefer accountant-signed accounts prepared by a qualified professional.
- Three to six months of business and personal bank statements showing income flow and day-to-day management.
- Current contracts for contractors, plus a CV or track history where useful.
- Management accounts if your latest filed year is more than nine to twelve months old or where there has been recent growth.
- Proof of ID, address, deposit source, and a clear audit trail for gifted funds.
Quality of documentation matters as much as quantity. Figures should reconcile across your accounts, tax returns, and bank statements. Inconsistencies are a common reason for delays.
How many months’ payslips for a mortgage UK self-employed?
If you are truly self-employed, payslips are rarely the main evidence. Lenders primarily use your SA302s, tax year overviews, and accounts. However, if you are a contractor paid via PAYE through an umbrella company, some lenders will accept three to six months of payslips and corresponding bank statements. Your broker will steer you to the route that reflects how you are paid.
Common mistakes to avoid
- Waiting to file your tax return: late filing can stall your application. File early so lenders see your latest income.
- Taking excess expenses to minimise tax just before applying: this can reduce your mortgage affordability. Balance tax efficiency with mortgage goals.
- Mixing personal and business spending: messy bank statements make it harder for underwriters to follow your story.
- Ignoring credit files: check all three agencies, fix errors, and avoid new debt in the run-up to your application.
- Assuming every lender treats income the same: they do not. Policy differences are often decisive for self-employed cases.
Practical steps to boost approval odds
- Prepare documents early and keep digital copies ready to share.
- Build a track record of consistent drawings, salary, or dividends that match your declared income.
- Reduce unsecured debts and unused overdrafts where possible.
- Save a larger deposit if your trading history is shorter or variable.
- Consider a longer mortgage term to improve affordability, then plan overpayments if your lender allows them.
- Work with a broker who can explain your income clearly to underwriters and who knows which lenders look at retained profit, contractor day rates, or latest-year figures.
Current lending climate for self-employed borrowers
Lenders remain active, and there is healthy competition for quality applications. Criteria continue to evolve in response to the wider economy, cost of living, and interest rate trends. Being prepared with the right evidence, and choosing a lender whose policy matches your profile, is more important than ever.
If you want a quick sense-check of criteria and deals, a specialist adviser can help you compare mortgage deals across high street and specialist lenders, which saves time and avoids unnecessary credit checks.
How we help
At AP Mortgage Solutions, we work with self-employed clients every day, from sole traders in their first year to experienced company directors with retained profits. We present your case in the best possible light, manage the paperwork, speak to underwriters, and guide you from initial enquiry to completion. If you are ready to get a mortgage, we can review your documents, confirm lender options, and give you a realistic borrowing range before you fall in love with a property.
You can also book tailored support for a mortgage for self-employed applications. We offer whole of market access, including lenders that understand contractor day rates and director income structures.
Key takeaways
- Two years of trading is common, but one year is possible with the right lender and profile.
- A 5% deposit can work for clean credit, while 10% or more usually improves choice and pricing.
- Borrowing is affordability-based, and how your income is assessed will vary by lender.
- Payslips are not the main route for self-employed, unless you are paid PAYE via an umbrella.
- Good preparation, tidy records, and lender matching are the fastest route to approval.
*Your home may be repossessed if you do not keep up repayments on your mortgage or any loan secured against it.
Conditions and lending criteria apply.
Not all Buy to Let Mortgages are regulated by the Financial Conduct Authority. If you have questions or want an early review of your documents, our friendly team is here to help*
