Documents required for a Self-Employed mortgage application

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What’s different about a Self-Employed mortgage?

There is no specific ‘Self-Employed mortgage’ and actually, there is nothing different about your mortgage if you’re a Self Employed applicant. You will have access to many of the same mortgage products as employed people and other applicants, but your application will be assessed differently. 

The more thorough assessment of Self-Employed applications is based on the perception that Self-Employed income is less stable than PAYE income from traditional employment. To balance this, Mortgage lenders use an average of your income from the most recent two years to calculate how much they are willing to lend you.

What specific documents do you need?

When you don’t have PAYE income, you need to prove your income substantially enough that the lender is satisfied you can afford the mortgage. The proof of income required will vary slightly between lenders and dependent upon the type of Self-Employed activities you carry out.

Limited Company

two years of accounts and SA302 forms are required to prove your personal salary and dividends payments. Most lenders will not consider retained profits, but there are a few lenders that may use the company’s Net profits after taxation 

Partnership

Income derived from owning a share in a business is only counted towards a mortgage application if you own 25% or more of the business. In this case, your share of the net profits is used to calculate your loan. The proof is likely to be the same documentation which would require SA302’s and Tax year overviews

Sole traders and freelance workers

An average of your personal earnings from the past two years will be used to establish your loan amount. SA302 forms for the past three tax years are substantial proof of your income.

How do you improve your chances of being accepted by a lender?

When applying for a mortgage as a Self-Employed applicant, it’s prudent to prepare in advance to increase your chance of securing a mortgage offer. The following can help:

Deposit

Larger deposits give you access to better rates, not to mention lowering the Loan to Value ratio of your lending, which reduces the risk to Mortgage Lenders.

Credit score

Increasing your credit rating can also improve your mortgage options. Some quick tips are:

  • Register on the electoral roll
  • Correct all account details and addresses
  • Reduce your debts
  • Minimise borrowing
  • Don’t apply for more credit

Financial preparation

Prepare the paperwork required in advance, for example, ensure accounts are finalised and certified by a qualified accountant.

Speak to Choice Finance Mortgage Brokers

Here at Choice Finance, we specialise in helping Self-Employed mortgage applicants to find independent lenders who have more competitive and attainable mortgage options for the Self-Employed. 

We can save you the frustration of declined applications by matching your circumstances to the right lenders for you, as well as supporting you with the administrative aspects of the application and preparation required to improve your chance of successfully securing a mortgage. 

Choice Finance Mortgages & Financial Solutions Ltd trading as Choice Finance is an appointed representative of PRIMIS Mortgage Network. PRIMIS Mortgage Network is a trading style of First Complete Ltd which is authorised and regulated by the Financial Conduct Authority

Your home may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.