Getting a mortgage while self-employed | YBS
If you’re self-employed and looking to get a mortgage, don’t fret. Being self-employed doesn't mean you can't buy a home, but you might need a few extra documents and details.
What is classed as self-employed?
For many lenders, you are self-employed if you own a 20-25% share in a business that generates most of your income.
This is the same if you’re set up as a:
This is the same if you’re set up as a:
Sole trader
Contractor
Limited company director
What you’ll need to provide if you’re self-employed
If you’re self-employed, you’ll need to give your lender more a few more details. Including:
ID
You will need to prove your identity. You can do this with:
A current passport
A full or provisional current UK or EU driving licence, or a UK driving licence
An EU member state ID card
A signed employer ID card
An Armed Forces ID card.
Financial documents
Every lender has their own rules for what they want to see when you apply. A lender may ask for:
A personal bank statement from the most recent month
The latest month’s business bank statement
Confirmation of your income from your accountant
You might also need to provide two years’ worth of SA302s.
Some lenders might want to see evidence of future earnings. You may need to say if you received any income from grants like the self-employment income support scheme (SEISS).
You may need to provide evidence of extra earnings, like a private pension, rental income and state benefits.
Your self-employed status matters too. For example, limited company directors may have to give details of dividend payments.
You may need to provide evidence of extra earnings, like a private pension, rental income and state benefits.
Your self-employed status matters too. For example, limited company directors may have to give details of dividend payments.
The mortgage process while self-employed
Here’s how to get the ball rolling in four simple steps:
1
Get a Decision in Principle. Start with a Decision in Principle. This will tell you if a lender might let you borrow, and how much.
2
Find your home and make an offer. Once you’ve had an offer accepted by a seller, it’s time to apply for a full mortgage.
3
Submit your self-employed info. Give the lender what they ask for, as part of your application.
4
Acceptance (hopefully!). Your lender will tell you if they want to lend to you.
Do you pay a higher mortgage interest rate if you’re self-employed?
No, you won’t pay a higher rate of interest if you are self-employed. A lender will look at lots of factors. These include:
Your loan to value ratio
How much you want to borrow
How long you want to borrow for (your mortgage term).
The content on this page is for reference and is not financial advice.
For impartial financial advice, try MoneyHelper.
For impartial financial advice, try MoneyHelper.
