Can I Get a Mortgage if I’m Self-Employed With Only One Year’s Accounts?
Yes, it may be possible to get a mortgage if you’re self-employed with only one year’s accounts. Some UK mortgage lenders will consider applicants with a shorter trading history, although your options will depend on your income, deposit, credit history and how your business is performing.
The key is finding a lender whose criteria suit your circumstances.
Do I need two or three years of accounts for a mortgage?
Not necessarily. Although many mortgage lenders prefer applicants to have been self-employed for at least two years, some will consider a mortgage application based on one full year of accounts.
Having a shorter trading history can reduce the number of lenders available to you, but it doesn’t automatically prevent you from getting a mortgage.
How do mortgage lenders calculate self-employed income?
This depends partly on how your business is structured.
If you’re a sole trader, lenders will commonly assess your taxable profits.
If you’re a limited company director, lenders may look at your salary and dividends. Some lenders may also consider retained profits within the company.
Different lenders assess self-employed income differently, so the amount you could potentially borrow can vary considerably between lenders.
What documents will I need with one year’s accounts?
The exact requirements vary between mortgage lenders, but you may be asked to provide documents such as:
- Your latest completed accounts
- SA302 calculations and Tax Year Overviews
- Recent personal bank statements
- Business bank statements
- Evidence of your deposit
- Proof of identification and address
A lender may request additional information depending on your business and individual circumstances.
Does having a bigger deposit help if I’m self-employed?
Potentially. A larger deposit means you’re borrowing a smaller proportion of the property’s value and can give you access to a wider range of mortgage options.
However, being self-employed doesn’t automatically mean you need a large deposit. Your income, affordability, credit history and the lender’s individual criteria will all be considered.
Can I get a mortgage if my self-employed income changes each year?
Potentially, although lenders can assess fluctuating income in different ways.
Some may look at an average of your income over a particular period, while others may place more emphasis on your most recent figures.
If your income has increased or decreased significantly, the lender may also want to understand the reasons for the change.
Can a mortgage broker help if I only have one year’s accounts?
Finding the right lender can be particularly important when you have a shorter self-employed trading history.
A mortgage broker can look at how you’re paid, your accounts, deposit and other circumstances before identifying lenders whose criteria may be suitable.
At GHL Direct, we compare thousands of mortgage deals from more than 50 UK lenders and understand that self-employed income isn’t always as straightforward as a monthly salary.
Self-employed and looking for a mortgage? Speak to a mortgage adviser and find out what options may be available.
YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
