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Getting a Mortgage If You Are Self-Employed

There is no doubt that applying for a mortgage can be a stressful experience for many people and with good reason. Studies have shown that roughly 40% of people in the UK who have applied for a mortgage have been initially turned down. The consequences of being declined for a mortgage are far-reaching – from preventing people perfectly eligible for a mortgage the chance of getting their dream home and onto the property ladder, to a personal sense of shame and failure.

However, there are numerous reasons behind such a high failure rate, many of which can be overcome – thereby substantially increasing a person’s chances of successfully getting the right mortgage for them. From outdated ‘myths’ regarding who can apply for a mortgage, to ill-advised advice, many mortgage applications are often doomed before they have even begun.

One such ‘myth’ surrounding mortgages is that they are more difficult for people who are self-employed. With nearly 5 million people currently classed as self-employed in the UK, this is of course a huge concern for many. However, this is simply not true. Whilst there may be additional paperwork involved, with the correct preparation and provision of required information, self-employed applicants have just a good a chance of being approved for their mortgage as other groups. To help you get a better understanding of what is required for a mortgage if you are self-employed, we have put together the following information:

Mortgage Tips for the Self-Employed

When looking at a mortgage application, lenders look at more than just the numbers – taking your personal situation also into account. Therefore, if you are self-employed, the following tips will help improve your chances:

Credit history

Before you apply, you should check your credit history to make sure there are no negative marks against you, and giving you the chance to try and rectify any such marks before you apply

Get advice

To ensure you get the best possible lender for you, and therefore the greatest chance of being approved, you are advised to speak to a qualified broker

Electoral roll

You need to be on the electoral roll – therefore, check with your local council to make sure you are

Direct debit

Direct debit is recommended for the self-employed as it helps to create a strong credit history by ensuring everything is paid on time. Whilst this is not possible for all – doing so will likely help your application

Avoid payday loans

Using such payday loans is seen by lenders as an indication of you being in financial difficulties. Whilst it is not always possible for some to avoid such lenders – doing so will improve your mortgage application chances

Credit card management

How you use your credit cards will also affect your application. You are advised to avoid regularly reaching your limit on any one credit card. Furthermore, when making your monthly credit card repayments – you should try to pay more than the minimum payment required – as this shows your intention to repay the money

Use an Accountant

If you intend to use business funds in your application – there are certain processes you can follow that will improve your chances – such as regular withdrawals being better than taking out one large lump sum

Agreement in principle

This is a document, often required by estate agents, that confirms how much you are able to lend, as well as reflecting your good credit standing

Be prepared

You will be required to provide a lot of documentation – see below – you should, therefore, plan well in advance before applying to give yourself the best possible chance of getting everything in order

The documents you need

Below is a list of the documentation you will be required to provide when applying for a mortgage if you are self-employed:

Photo ID

This must include a recent and accurate photograph and your current address

Proof of address

Such as a utility bill, council tax bill or bank statement

Proof of employment

To prove you are in regular employment, you will be required to provide 3-6-months of pay-slips, as well as your P60

Personal tax returns

If you are self-employed, you will be required to provide a tax overview and 3-years-worth of SA302s – all of which can be obtained from HMRC upon request

Limited Company

If you are a director of a Limited Company, you will need to provide records of accounts for the previous 2-years.


Contractors are required to provide the previous 12-months of fully-signed contracts – including your day rate and how much you received

Bank statements

Either postal or downloadable, you will need to give the previous 3-months bank statements – with salary payments included, 3-months-worth of business bank statements and 3-months-worth of bank statements showing any rental payments


You will documentation showing you have the required amount in funds. If this money is a gift from a family member, you will be required to provide a letter from them clearly confirming this

Life insurance

Lenders will often require evidence of any life insurance you have in place that may cover the mortgage – you will likely only be required to provide a copy of the policy summary

Good Luck!

Due to the complexities of an application, preparation and getting good advice are vital. You must also give yourself ample time in which to collect all the information and documents required. Failure to do so may cause delays further down the process – or worse, result in your application failing altogether. By ensuring you have all the information required and getting advice as to the type of mortgage best for you, you will be giving yourself the best possible chance of being approved.

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