How Much Can I Borrow as Self-Employed?

Use the mortgage calculator below to get a quick idea of your borrowing options. You only need to input a few details.

You’ll receive an estimate that reflects the criteria lenders use, tailored to your finances.

This should take less than 30 seconds to complete.

[Embedded Self-employed Calculator]

Please note, that the figure you see is a starting point and could change after a full review and underwriting. For more accurate advice, consult one of our specialist advisers.

A Look at Self-Employed Mortgage Borrowing Potential

If you’re self-employed, mortgage lenders usually look at the average earnings you’ve made over the past three years to figure out how much you can borrow. 

Once they have that average, they use it to apply their standard lending rules, often called “affordability criteria.”

Most lenders will let you borrow about 4 to 4.5 times your average yearly earnings. Some might even go up to 5 times or 6 times, especially if you’re in a professional field like law or medicine.

Let’s say you’ve been earning an average of £50,000 a year for the last three years. With the usual income multiple of 4.5, most lenders would let you borrow up to £225,000.

But what if you’re new to being self-employed? No worries. We can connect you with mortgage brokers experienced in helping people who have only two years, or even less than a year, of trading history.

How Can You Use Our Self-Employed Calculator Effectively?

Using our Self-Employed Mortgages Calculator is as easy as pie, and you don’t even have to give any personal details. Here’s what you need to do:

  1. Pick your type of work – whether you’re a sole trader, in a partnership, a contractor, or a director.
  2. State how many years you’ve been in business.
  3. Plug in your earnings for the last one, two, or three years—whatever fits your situation.

Note:

  • If you’re part of a partnership, include your share of the business profits.
  • If you’re a company director, choose if you want the estimate based on your salary and dividends, or on the business’s retained profits.
  • If you’re a contractor, use your daily rate and how many days a week you work.

And voila! The calculator will then give you an estimate of how much you might be able to borrow for your mortgage. It’s that straightforward!

A Few Things to Consider:

> Keep It Accurate
The numbers you see are just rough estimates and hinge on the info you put in. So, keep it accurate to get the most reliable estimate.

> Lender-Specific Rules
Our calculator is pretty tuned in to what most lenders look for, but keep in mind, that some lenders play by their own rules. For the full lowdown, a chat with an advisor or lender might be your next best move.

> Not a Formal Offer
The estimates are just that—estimates. They’re not official loan offers or financial advice. If you’re serious about crunching the exact numbers, it’s wise to consult a self-employed specialist or financial adviser to dig deeper into your options.

Digging Deeper: More of Self-Employed Mortgages

What are Self-Employed Mortgages?

Self-employed mortgages aren’t a different type of mortgage, but they do come with a unique set of rules when you apply.

Normally, when you’re an employee, a lender just looks at your salary to figure out how much they’d lend you. It’s straightforward. But if you’re self-employed, it’s a bit different. Lenders want to know you can make your mortgage payments even if your income varies each month.

That’s why they’ll often ask for more evidence of your income over a longer period, usually 2-3 years. They’ll look at your tax returns, business accounts, or any combination of financial documents to get a sense of your average yearly income. 

Once they’ve got that figure, they use it to determine how much you can borrow, just like they would for someone who’s not self-employed.

So, while the mortgage products available to you aren’t different because you’re self-employed, the process to prove you’re a reliable borrower is a bit more detailed. Don’t worry, though; it’s all doable with some good planning.

How Does Being Self-Employed Affect Your Mortgage Calculation?

As discussed, when you’re self-employed, your mortgage size is often tied to the income you report on your tax returns or company accounts. The kind of self-employment you’re in matters too. For example:

  • If you’re a sole trader, your mortgage will usually be based on your net profit.
  • If you’re a company director, the focus shifts to your dividends and company profits.

How Long Should You Be Self-Employed to Get a Mortgage?

Your employment history comes under the spotlight here.

Generally, if you’ve been your own boss for at least three years, securing a mortgage is often smoother. 

However, don’t lose heart if you’ve been self-employed for just a year. The key thing is to have your latest accounts ready because lenders will ask for them.

What Size of Deposit Do You Need as a Self-Employed Person?

The deposit you’ll need varies. Most lenders like to see a 10% deposit. However, some might let you slide with just a 5% down payment. But there’s a catch: your credit history and affordability come into play.

If you’re not hitting the mark on a lender’s requirements, aim for a 10-15% deposit. Keep in mind, that a mortgage with just a 5% deposit usually comes with higher interest rates compared to one with a bigger deposit.

How to Get a Self-Employed Mortgage

Getting a mortgage when you’re self-employed is all about proving you have a steady income. Here’s a quick guide:

  1. Show 2 or more Years of Income Verified by an Accountant – The more years you can provide, and the higher the profits, the stronger your application will be.
  2. Submit Tax Forms if Accounts Are Unavailable – Tax year overviews or SA302 forms from HMRC can serve as a substitute for official accounts.
  3. Provide Proof of Ongoing and Future Work – This is particularly helpful if you’re a contractor with varying income.
  4. Disclose Additional Business Profits – If you’re a company director, retained profits or dividends can improve your borrowing capacity.
  5. Reveal Additional Income Sources – Rental income or other investments can bolster your application if documented properly.
  6. Save a Large Deposit and Keep Good Credit – The bigger your deposit and the cleaner your credit history, the more favourable the terms you’re likely to get.
  7. Prepare All Necessary Documents –  Having your documents ready can expedite the property-buying process

If this feels like a lot, a broker experienced in self-employed applications can simplify things by helping you gather the right paperwork and find a lender that matches your needs.

Do self-employed people get higher mortgage rates? 

Not always. Rates depend on things like your credit score, how much you can put down upfront, and how stable your income is.

It’s not just about being self-employed. If you show lenders you’re a low-risk borrower, you can get the same rates as anyone else.

Can Sole Traders Secure Mortgages?

Sole traders have good mortgage options. Many lenders offer loans based on your income history, and some only require six months of trading. 

To get the best mortgage deal, consider finding a broker or lender who specialises in sole trader cases. They know which lenders can offer you customised mortgage plans at favourable rates, making a seemingly tough task easier.

>> More about Mortgages for Sole Traders and Partnerships.

How Do Mortgages Work for Directors?

If you’re a company director, getting a mortgage works much like it does for anyone else: you need to show you can make the repayments. 

But here’s the challenge: Some traditional lenders might see you as risky because they don’t understand your varied income. If that happens, don’t worry. 

There are specialist lenders who get it. They consider your total income, including things like dividends, to give you a fair assessment. So, even if one lender says ‘no’, don’t lose hope. With the right advice, you can find a lender that understands your situation.

>> More about Mortgages for Directors.

Can You Get a Mortgage If Self-Employed with No Accounts?

Yes, you can. Normally, lenders ask for three years of accounts. But what if you’re new to being your boss? Some lenders will accept alternative income proofs like bank statements. 

Your goal is to show that, even without accounts, you’re good for the loan. So not having accounts doesn’t have to stop you from getting into your dream home. A lender who gets your unique situation can make all the difference.

>> More about Mortgages for Without Accounts.

What About Mortgages for LLPs?

LLPs can get mortgages, but it’s a bit trickier. When you’re in an LLP, you’re seen as self-employed, which means a unique set of checks and requirements. 

You’ll need to show your income and explain how your LLP works. If you’re aiming to buy an investment property with partners, things may get even more complex. 

In this case, a broker with LLP expertise can guide you to the right mortgage option, making the application process less daunting.

>> More about Mortgages for LLP.

Can You Get a Joint Mortgage with a Self-Employed Worker?

Yes, obtaining a joint mortgage with a self-employed person is possible. In a joint mortgage, both names appear on the mortgage documents, and both parties are responsible for making the payments. Both incomes, including the income of the self-employed person, are considered when assessing the ability to buy.

The self-employed individual will need to show proof of earnings and expenses, following the same process as if applying alone. It’s a straightforward way for both of you to work together towards homeownership.

Can Self-Employed People Get Buy-to-Let Mortgages?

Yes, they can. You might think being self-employed limits your choices, but it’s not so. Even if you make a small profit, like £200, that counts as income for some lenders. If you’ve been a landlord before, that’s a plus.

Here’s why: The rent you get usually covers the mortgage payments. So, lenders often focus more on the rent money than how you make your income. Plus, these types of mortgages often have low monthly payments, making it easier for you.

>> More about Buy to Let Mortgage for Self-Employed.

Can You Get a Mortgage if You’re Self-Employed with Bad Credit?

Bad credit can make getting a mortgage harder, especially if you’re self-employed. Although some lenders may see you as high-risk, others understand the challenges of self-employment and bad credit.

If you have serious credit problems like recent CCJs or bankruptcy, it’s a good idea to consult a knowledgeable mortgage broker. Also, you can prove your income through a self-assessment tax return. The SA302 form from HMRC is often accepted as proof of income, making your mortgage application stronger.

>> More about Bad Credit Mortgages when Self-Employed.

Can I Remortgage When Self-Employed?

Yes, you can. Start looking at options about three months before your current mortgage ends.   

Standard mortgage lenders often have stringent rules that could make it difficult to prove you’re a reliable borrower. However, there are specialist lenders who cater specifically to the self-employed. 

These lenders consider various income streams and are generally more flexible. Additionally, there are mortgage advisors who specialise in assisting self-employed individuals.

Being self-employed does add challenges, but specialist lenders and advisors can help. They focus on getting self-employed people the remortgage deals that work for them.

>> More about Self-Employed Remortgage.

The Bottom Line: What’s Your Next Step?

Alright, you’ve crunched the numbers with our self-employed mortgage calculator. You’ve got a ballpark figure for your borrowing limit and monthly payments. But knowing the numbers is just the first step.

The smart thing to do now is consult a mortgage broker who specialises in helping self-employed individuals like you. 

A specialist broker doesn’t just pick any lender; they find lenders who understand the unique income flow and financial situations of self-employed people. This not only saves you time but could also land you a mortgage deal that better suits your needs.

And remember, while having strong accounts and credit is great, these brokers also know lenders who are flexible with requirements. If your self-employment is fairly new or you’ve faced credit issues in the past, the right broker can be a game-changer.

So, don’t hesitate. Simply, fill out this quick form to reach out. And we’ll promptly connect you with an advisor who understands the ins and outs of self-employed mortgages. This isn’t just about finding a mortgage; it’s about securing the best possible deal tailored for you.