What every self-employed buyer should know before applying for a mortgage

The self-employed market has gone from strength to strength over the years, rising from 3.3 million people in 2001 to 4.4 million in the second quarter of 2025. Over the course of more than two decades, the self-employed have made a huge impact on the economy as the Association of Independent Professionals and the Self-Employed (IPSE) details:

“With the research revealing an increase in the overall economic contribution of the solo self-employed and an increase in the number of over 40-49 year olds adopting this way of working, self-employment continues to appeal to those in the prime of their careers. The rise in the number of side hustles in the UK should also be celebrated, with working mothers in particular benefiting from the flexibility and autonomy of this additional income stream.”

With the self-employed now a bigger part of the action, you’d think things like purchasing a property would be made simpler for this growing group. While self-employed individuals can get a mortgage, they face additional challenges when compared with employed applicants.

Here we state the facts and bust the myths for self-employed mortgage applicants so they can proceed with caution and complete clarity…

You’ll need at least a year of financial records

Newly self-employed professionals are generally a no-go for lenders. While in previous years applicants require at least two years (three years in some cases) of financial records to support their mortgage applications, some lenders will now assist with one year’s accounts.

For sole traders, income is generally assessed through bank statements and tax returns, with the lender looking for evidence that they earn what they say they earn and analysing net profit in detail as a result. If you’re a limited company director, your salary and dividends will come under scrutiny. Some lenders will accept retained profit as income if you have a limited company as well as salary and dividends.

With this in mind, it is worth speaking to an independent broker like ourselves to source the most suitable lender for your circumstances and self-employment status.

Not all self-employed people are considered self-employed

That’s right, while on paper, you may be considered a sole trader, contractor, limited company director or freelancer, the lender’s criteria may see things differently.

As a rule of thumb, if you own more than 20 to 25% of the business, you will be considered self-employed. It’s a different story for agency workers paid through umbrella companies however. Be sure to consult with your mortgage broker to confirm your status.

Preparation really does make perfect when applying for a mortgage

If time is on your side when making a mortgage application as a self-employed person, use it to put yourself in the best position possible.

Take the time to build up a good mortgage deposit – the bigger, the better! It could make or break your mortgage success. Be sure to adjust your spending habits in the months before your mortgage application. Lenders will go back at least three months to examine your outgoings, and this applies to your business expenses too. You should also avoid applying for finance before you apply for your mortgage as this may affect your credit rating.

Seeking advice from one of our mortgage brokers is another thing we’d recommend. We’ve helped countless individuals get on the property ladder, including self-employed professionals, and we’re here to help you. Get in touch with us today to discuss your next steps.