Being self-employed does not stop you from getting a mortgage. Millions of people in the UK run their own business or work for themselves, and lenders deal with self-employed applications every day. The process is a little different from a standard employed application, but understanding what lenders look for makes it far less daunting.

Why lenders treat self-employed applicants differently

When you are employed, a lender can verify your income quickly using payslips and an employer reference. When you are self-employed, income can vary from year to year, which means lenders need more evidence before they can assess affordability. That does not mean the bar is higher - it just means the paperwork looks different.

How lenders assess self-employed income

The way your income is calculated depends on how your business is set up.

Sole traders and partnerships

Lenders will typically look at your net profit, the figure after business expenses have been deducted. Most will want to see two or three years of figures, though some will consider one year if your income has been growing consistently.

Limited company directors

If you run a limited company and pay yourself a combination of salary and dividends, most lenders will assess your income based on salary plus dividends received. Some lenders are willing to use salary plus net profit instead, which can produce a higher figure if you retain profit in the business rather than drawing it all as dividends. Lenders' policies on this vary significantly, which is one of the reasons specialist advice makes a real difference here.

What documents will you need?

Most lenders will ask for:

• Two to three years of self-assessment tax returns

• The corresponding HMRC tax year overviews, which confirm the figures have been submitted and what tax is owed

• Two to three years of accountant-prepared accounts (for limited company directors)

• Three to six months of business and personal bank statements

• Proof of identity and address

The tax documents can be obtained from HMRC or your accountant. If you do not have an accountant, it is worth getting one before you apply. Many lenders prefer accounts prepared by a qualified professional.

How far in advance should you prepare?

Ideally, start thinking about your mortgage at least six to twelve months before you plan to apply. That gives you time to review your tax returns, tidy up your accounts, and avoid any last-minute decisions that could reduce your stated income just before a lender looks at it - such as writing off a large expense in the tax year immediately before your application.

It is also worth checking your credit file ahead of time. A clean credit history makes the process smoother regardless of how your income is structured.

Does the number of years trading matter?

Most high street lenders want two full years of self-employed history. If you have been self-employed for less than two years, your options are narrower but not non-existent. Some lenders will consider applications with one year of accounts, particularly if you were previously employed in the same field.

Can I borrow the same amount as an employed person?

Affordability is assessed on your income, the same as for anyone else. The difference is simply how that income is verified. If your declared income supports the level of borrowing you need, there is no reason your application should be at a disadvantage compared to an employed applicant with the same earnings.

Getting the right advice

Not all lenders approach self-employed income in the same way. Some are far more flexible than others, and the right lender for your situation will depend on how your business is structured, how your income is drawn, and whether your figures have fluctuated year to year.

Our self-employed mortgage advice service is designed for exactly this kind of application. We know which lenders are most likely to look favourably on your circumstances and can help you put together the strongest possible case before you apply.

If you work through a contract rather than running a traditional business, our contractor mortgage page covers how that works in more detail.

You can also take a look at live mortgage rates to get a sense of what is available right now.

Ready to find out more?

We help self-employed borrowers secure mortgages every day, from sole traders to limited company directors. Find out more about how we support self-employed applicants here: https://aspectmortgages.co.uk/specialist-mortgages/self-employed

Or get in touch with our team directly. We are happy to talk through your situation and explain what your options look like.