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Can you get a mortgage being self-employed for 1 year?

Here we have our top tips for newly self-employed workers looking to apply for a mortgage this year

A photo of Daniel Sharpe-Szunko, the author

By Daniel Sharpe-Szunko

Published on: 4 July 2023

4 min read

Can you get a mortgage being self-employed for 1 year?

A common question for self-employed workers is how their job role will affect their chances of getting a mortgage. This can be an even bigger concern if you have only recently switched to being self-employed or started a new business.

It is possible to get a mortgage when you have been self-employed for only 1 year – but there will be a few extra requirements and things to think about. It is a good idea to speak to a qualified mortgage broker in this situation for proper advice and support.

SUMMARY: We aren’t mortgage brokers, but we know what to look out for and most importantly key things to avoid. Here we have our top tips for newly self-employed workers looking to apply for a mortgage this year.

More about mortgages:

There are literally thousands of self-employed workers in the UK. This type of occupation can be very rewarding but can cause some challenges when you apply for a mortgage.

You will need to answer a few extra questions about your income to prove affordability to the lender. This helps the lender to assess how much risk there is in lending to you and if you seem likely to be able to keep up with repayments long term.

Lenders will usually ask things such as:

  • Can you provide proof of income? e.g. business accounts, SA302
  • How you receive income e.g. salary or dividends
  • Is your business profitable?
  • Do you have an accountant and up to date accounts?

When am I classed as self-employed for mortgages?

Most lenders will classify you as self-employed if:

  • You own 20%-25% of a company which is your main source of income
  • You are a sole trader or freelance worker
  • You are a company director
  • You own a limited company
  • You are a fixed term contractor

Requirements for mortgages (1 year self-employed)

Anyone who is self-employed will usually need to provide the following when applying for a mortgage:

  • SA302 (Self-assessment tax return)
  • Bank statements to evidence income
  • Business accounts and accountant reference
  • Income structure e.g. salary or dividends
  • An estimation of your annual income

As with any mortgage, lenders will also consider factors like:

  • Your credit score/credit history
  • Income vs outgoings (how much you earn vs how much you spend)
  • Any assets you have e.g. other properties
  • Deposit amount (a larger deposit could increase the chance of approval)

It can be difficult to accurately prove your income when self-employed. The lending criteria for some lenders will work better for your circumstances than others.

You also need to think about the type of mortgage you are applying for. Buy to let mortgages for example already have stricter lending criteria and usually require a larger deposit.

Our main tips to improve your chances of getting a mortgage would be:

  1. Speak to a specialist mortgage broker for help with any questions you have and support in finding the right lender
  2. Make sure all your personal and business accounts are accurate and up to date
  3. Check your credit score – and improve it if necessary (poor credit can lower your chances of application approval)
  4. Shop around for the lowest rates and do your research before choosing a lender to make sure you get the best deal
  5. Consider a specialist mortgage lender rather than a big mainstream name – these lenders may be more likely to say yes!
  6. Consider a joint mortgage – applying with a partner or family member will mean their income is assessed as well as yours
  7. Wait before you apply – in some cases you might be better off waiting until you have been trading a little longer. Otherwise, you could get stuck with high mortgage rates that are unaffordable long term.

When applying for a mortgage, you don’t want to waste any time applying to the wrong lenders. Some mortgage providers won’t accept applications from self-employed workers with less than 2 or 3 years of accounts. Your best bet will be to apply to lenders who specialise in self-employed mortgages for your best chance of being approved.

Examples of mortgage lenders who will accept 1 years accounts:

  • Vida Homeloans
  • Norton Home Loans
  • Newcastle Building Society
  • Scottish Building Society

You can also try applying to other lenders who specialise in self-employed mortgages, though the rates available may vary. Some may be willing to offer a mortgage where others would decline, so it is worth looking around and getting some advice before making any decisions.

There are even certain high street lenders that will provide self-employed mortgages, though you may want to hold off applying to them until you have been trading for longer.

Self-employed mortgage lenders include:

  • Aldermore
  • Bluestone
  • BM Solutions
  • Barclays
  • Chorley Building Society
  • Halifax
  • HSBC
  • Kensington Mortgages
  • Legal & General
  • NatWest
  • Nationwide
  • Saffron Building Society

You might prefer to apply to a high street lender, particularly if you already have accounts with them. One of the mainstream lenders that will offer self-employed mortgages is Halifax.

They do state on their website that they may ask for 2 years evidence of regular income and accounts. However, it has been possible in the past to get a mortgage through Halifax with 1 year of accounts.

Mortgage applications will be assessed on a case-by-case basis. If you are struggling to get your mortgage approved through Halifax, you should speak to a mortgage broker to work out your best next steps.

More information – Halifax mortgage review

Resources – How to buy a home – Self-employed: detailed information – Working for yourself

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