Yes, you can get a mortgage when you’re self-employed. There is no separate “self-employed mortgage” product. You apply for the same mortgages as everyone else. The difference is how lenders assess your income, and that difference is where most applications either succeed or fail.
If your income comes from a payslip, lenders read a number. If your income comes from accounts, tax returns, or a day rate, lenders have to interpret. Two lenders can look at the same set of figures and come back with completely different borrowing amounts, not because your income changed, but because they assessed it differently. Getting the lender choice right before you apply is where a broker earns their place.
This guide covers how lenders assess self-employed income by business structure, what documents you need, what gets applications declined, and how to put yourself in the strongest position. It’s written by Brennan Goodwin, mortgage adviser at Heron Financial, based on the self-employed cases he works with every week.
How lenders define “self-employed”
For mortgage purposes, you’re generally classed as self-employed if you own 20% or more of a business from which you earn your main income. That covers a wide range of people: sole traders running their own business, limited company directors taking salary and dividends, partners and LLP members, freelancers working for multiple clients, CIS subcontractors in the construction industry, and day rate contractors working on fixed-term engagements.
Each of these is assessed differently by lenders, and that’s the part most guides gloss over. A sole trader’s net profit is not the same thing as a director’s salary plus dividends, and the lender that works well for one may decline the other.
How lenders assess income: the part that actually matters
This is where applications are won or lost, and it deserves more attention than most guides give it.
Sole traders
Lenders typically assess a sole trader on their net profit as declared on their SA302 tax calculation. Most will average the last two years. Some will use the most recent year if the trend is clearly upward, which can make a meaningful difference if your business is growing.
The key tension for sole traders is the gap between what you earn and what you declare. Minimising your taxable income is sensible from a tax perspective, but it directly reduces what a lender will offer you. If you’re planning to apply for a mortgage in the next 12 months, it’s worth discussing your tax strategy with your accountant with one eye on your borrowing figure.
Limited company directors
This is the most misunderstood area of self-employed lending, and the one where lender choice has the biggest impact on what you can borrow.
Lenders assess director income in one of two ways:
Salary plus dividends drawn. This is the most common approach. The lender adds your PAYE salary to the dividends you’ve taken out and treats the total as your annual income. For a director who draws a low salary (say £12,570) and modest dividends, the assessed income can be surprisingly low.
Salary plus share of net or retained profit. A smaller number of lenders will look at the profit sitting in the company, not just what you’ve drawn. For a director who leaves profit in the business for tax efficiency, this approach can produce a dramatically higher borrowing figure.
The difference between these two methods is not marginal.
How lender choice changes what you can borrow
Same director. Same figures. Drawing a salary of £12,570 and dividends of £30,000, with £60,000 of retained profit in the company. Two different lenders, two very different outcomes.
Lender A: Salary + Dividends
Lender B: Salary + Net Profit
Figures shown are for illustrative purposes only and do not constitute a mortgage offer. Actual borrowing depends on your individual circumstances, the lender's assessment, deposit, and the product available at the time of application. Your home may be repossessed if you do not keep up repayments on your mortgage.
"The retained profit question is the one I spend the most time on with directors. Most of them have been to their bank, been told they can borrow a certain amount based on salary and dividends, and assumed that's the answer. When I show them what a lender using net profit would offer, the reaction is usually disbelief. It's the same accounts, the same tax return. The only thing that changed is which lender is looking at it."
Brennan Goodwin
Mortgage Adviser, Heron Financial
Contractors
Contractors on a day rate have a separate route. A growing number of lenders will assess contractor income by multiplying the day rate by the number of working days, rather than looking at accounts. A contractor earning £400 per day, working five days a week across 46 to 48 weeks, produces an annualised income of roughly £92,000 to £96,000, to which standard income multiples are then applied.
To use day rate assessment, most lenders require the contractor to have been working for at least 12 months, to have a current contract with at least four to six weeks remaining, and to show a history of consistent engagement. This route is available across many sectors, not just IT. Locum doctors, engineering contractors, interim managers, and project consultants can all benefit from it.
Freelancers and multiple income streams
If your income comes from several sources, such as freelance work alongside part-time employment, or multiple clients with no single employer, lenders need to see consistency across the streams. Some lenders will use all of your income; others will discount or ignore secondary sources. How this is presented, and to which lender, makes a significant difference to the outcome.
How many years of accounts do you need?
The standard answer is two to three years, but it isn’t a universal rule.
Trading history and lender availability
| Trading history | Lender choice |
|---|---|
| 3+ years of accounts | |
| 2 years of accounts | |
| 1 year of accounts | |
| Under 1 year |
If you have one year of accounts, lender choice becomes critical. Applying to a two-year-minimum lender wastes time and leaves a credit search on your file. A broker who works with one-year cases regularly knows which lenders are open to it and what supporting evidence strengthens the application.
What documents will you need?
Self-employed applications require more paperwork than PAYE, because lenders are building a picture from multiple sources rather than reading a number off a payslip. Having everything ready before you approach a lender materially reduces the timeline.
Documents you will need
| Two to three years of SA302 tax calculations from HMRC | |
| Matching tax year overviews | |
| Three months of personal and business bank statements | |
| Proof of identity and address |
| Two to three years of finalised company accounts (prepared by a qualified accountant) | |
| SA302 tax calculations and tax year overviews | |
| Three months of personal and business bank statements | |
| An accountant's reference or certificate (ACCA, ACA, or equivalent) |
| Current contract showing day rate and remaining term | |
| Evidence of contract history (usually 12 months minimum) | |
| SA302s and tax year overviews (if accounts-based assessment is also being considered) | |
| Three months of bank statements |
An accountant’s reference carries real weight on self-employed applications, particularly where you have fewer years of trading. A clear note confirming the figures, the business structure, and ideally a comment on current trading can be the difference between an approval and a referral.
How much can you borrow?
The same income multiples apply as for employed borrowers: typically 4 to 4.5 times your assessed annual income, with some lenders stretching to 5 or 5.5 times in the right circumstances. The variable that changes your borrowing most is not the multiple. It’s how the lender defines your income.
This is why the salary-plus-dividends versus net-profit distinction matters so much for directors, and why contractor day-rate assessment can significantly outperform an accounts-based approach. The lender you apply to determines the input figure, and the input figure determines the output.
Do you need a bigger deposit?
Not necessarily. Self-employed applicants can access the same deposit levels as employed borrowers, including 5% deposit (95% LTV) products, depending on the lender and the strength of the overall application. A larger deposit does widen your lender choice and can improve your rate, but it is not a requirement of being self-employed.
What gets self-employed mortgage applications declined?
Understanding what goes wrong is as useful as understanding what lenders want.
Applying to the wrong lender
The single biggest cause of self-employed declines. A lender whose policy doesn't suit your income structure will decline you automatically, and the credit search it leaves behind can count against your next application.
Assuming retained profit will be used
If your borrowing depends on net profit but you apply to a salary-plus-dividends lender, the affordability assessment collapses. Most directors don't know which approach their chosen lender uses until it's too late.
Tax-efficient income working against you
Minimising taxable income is good tax planning, but it directly reduces what a mortgage lender will offer you. If you're planning to buy in the next year, discuss the trade-off with your accountant before your next return.
A declining year dragging down the average
If your most recent year shows lower income, lenders who average mechanically will produce a lower figure. Some will use the most recent year with a reasonable explanation. Knowing which is part of the broker's value.
Late or unsubmitted accounts
If your accounts aren't up to date, most lenders won't proceed. Filing late is a red flag. Get your accounts finalised and filed well ahead of any application.
Multiple applications in a short window
Each application leaves a credit search. Several close together signal difficulty to underwriters. Getting the lender right first time avoids this entirely.
Why a broker matters more for self-employed applications
For a PAYE employee with a clean salary, going direct to a bank is a reasonable option. For a self-employed borrower, it is genuinely risky, because the lender you happen to walk into may not assess your income favourably, and the decline can make the next application harder.
A whole-of-market broker who handles self-employed cases regularly adds value in three specific ways. They know which lenders assess your specific income type most favourably before a single application goes in. They package the application, the accounts, the accountant’s reference, and the supporting documents so the case is presented in its strongest form. And they handle the lender chasing and the back-and-forth so you can focus on running your business.
The difference between a good outcome and a frustrating one for self-employed borrowers is almost always lender choice and application packaging, not the borrower’s circumstances. If your bank has said no, or offered less than you expected, that’s usually a lender-fit issue, not a you issue.
FAQs
Can you get a mortgage if you're self-employed?
Yes. Self-employed people apply for the same mortgages as everyone else. The difference is how lenders assess your income, which varies by business structure and by lender. A sole trader is assessed on net profit, a company director on salary plus dividends or net profit depending on the lender, and a contractor potentially on day rate.
How many years of accounts do I need for a self-employed mortgage?
Most lenders ask for two to three years, but it is not a universal rule. A genuine number of lenders will consider one year of finalised accounts, and a small number will look at less in specific circumstances. The fewer years you have, the more lender choice matters.
Can I get a mortgage with one year of self-employed accounts?
Yes, with the right lender. These cases are more specialist and the application needs to be well-packaged, but it is a realistic option for borrowers with a clean credit profile, a stable income, and a reasonable deposit.
Should I use a mortgage broker if I'm self-employed?
For most self-employed borrowers, yes. A broker who handles self-employed cases regularly knows which lenders suit your income structure, how to present the application, and how to avoid unnecessary declines. Going direct to a single bank means you're assessed against one set of criteria, which may not suit how you earn.
Does Heron Financial specialise in self-employed mortgages?
Yes. Heron Financial works with self-employed clients, sole traders, company directors, and contractors every week, including borrowers with one year of accounts and those who have been declined by their bank. As a fee-free, whole-of-market broker, Heron matches each case to the lenders most likely to assess the income favourably, and handles the application and packaging at no cost to the client.