Self Employed

We believe being self employed can actually be a benefit to your chance of getting a mortgage and can provide several options to maximise your budget and/or improve your options – subject to the individual circumstances. A large number of our clients are self employed and we take great pride in being able to go above and beyond to fully understand our clients businesses as well as their mortgage needs, which often makes the difference between a good result and a great one.

Being self employed may mean you fit one of these categories, and would also dictate how we would assess your income:

• Sole trader – you may or may not have employees (despite the name!) but you do not trade through a limited company – we would look to assess your SA302 from HMRC, or tax calculation forms from your accountant along with corresponding tax year overviews (contact us or your accountant for help obtaining these).
• Limited company director – Despite being “employed” by a company if you own more than 20% of the shares in the business you will be considered self employed by some lenders and at 25% and above almost all mortgage lenders will treat you as self employed. We have options with how to maximise your budget in this scenario by using either salary and dividends, salary and net profit, or even retained profits. To add complexity this could be from your personal tax returns or company accounts, so we’ll normally ask for both so we can present the best solution to you.
• Limited liability partnership – This less common form of self employment is rarer than the prior two but remains a successful model in several trades in particular, we will look to assess the income from your personal tax returns in this scenario

It is possible to consider raising a mortgage after just one year of trading (with limited lender choice) or even sooner in exceptional circumstances, such as where an individual has gone from sole trader to limited company in the same sector. Whilst the majority of lenders will look to asses two or three years of income to calculate an average or a trend there are some who will still consider the most recent years income only as long as it is sustainable, and there are even lenders who can consider projections in particular circumstances to support your case.

It is also important to note that a good / proactive accountant can make or break the ability for a self employed client to obtain a mortgage, with accountants references carrying more weight than they have done previously, especially in changing economic environments.