Can The Self-Employed Get Mortgages With 1 Years’ Accounts?

When you’re self-employed, it can be a bit more challenging to get a mortgage and purchase a house – but it’s certainly not impossible. The main difference for the self-employed is how to evidence your income to lenders, and how they assess it.

Many lenders will ask for three years’ worth of business accounts so that they can determine whether you’ll be able to afford the repayments on the mortgage that they’re considering for you.

For people who’ve been in business for themselves for some time, this won’t be a problem – but what if you’ve only been trading for a year?

The good news is that all is not lost if this is the case and you’ll find that there are lenders out there who will offer you a mortgage based on 12 months’ worth of accounts. However, you will likely need to have a specialist mortgage broker on your side to ensure that you’re able to find the most appropriate deals on the market.

How to prove your income with one year’s worth of accounts

To provide proof of your self-employed income, you will need to make sure that your business accounts are prepared by a chartered or certified accountant. Lenders will also likely want to use your SA302 year-end tax calculation form from HMRC, which provides a tax year overview of earnings.

You can speed up the application process if you have both of these ready to be sent off before you get in touch with mortgage providers.

Once lenders have reviewed your accounts, they’ll be able to decide how much you can borrow. All lenders have their own criteria and calculations, so make sure you speak to a mortgage broker early in the process.

One piece of good news, if you’re concerned, is that you won’t have necessarily have to put down a bigger deposit than anyone who isn’t self-employed if you do only have one years’ worth of business accounts. Standard industry practice is for lenders to require a deposit of at least five per cent of the property value in question.

Improving your chances of being accepted for a mortgage

If you’re self-employed, there are various ways in which you can increase your chances of being accepted for a mortgage, including:

– Saving a good percentage of the property value for your deposit

– Checking your credit score regularly and challenging any errors you find

– Speaking to a mortgage broker

– Choosing your property investment carefully, as mortgage providers will be less willing to lend on anything they consider a risk (such as a flat above a shop)

– Applying for a joint mortgage with someone who’s not self-employed