If you’re self-employed and dreaming of owning your own home, you’ve probably heard that getting a mortgage can be harder. It’s one of the most common concerns among freelancers, contractors, sole traders, and company directors. But here’s the good news: while the process can be a bit more involved, being self-employed doesn’t stop you getting a mortgage — not by a long shot.

In this guide, we’ll walk you through everything you need to know about self-employed mortgages in the UK, from how lenders assess your income to the documents you'll need, and why working with a local mortgage broker in Nottingham could give you a big advantage.

Whether you're just starting out or you’ve been self-employed for years, this blog has everything you need to confidently navigate the mortgage market.

What Is a Self-Employed Mortgage?

First things first: there’s no such thing as a special "self-employed mortgage" product. Self-employed people apply for the same mortgage deals as everyone else. The difference lies in how lenders assess your income and affordability.

When you're employed, a lender looks at your salary, which is easy to verify with payslips. But when you're self-employed, income can be irregular, seasonal, or structured in ways that are less straightforward — so lenders need more proof to assess your ability to repay.

The key to getting a self-employed mortgage is solid documentation and professional advice.

Who Counts as Self-Employed?

You're generally considered self-employed if you own more than 20–25% of a business and your income isn’t PAYE-based.

This includes:

Sole traders (e.g. freelancers, plumbers, hairdressers)

Company directors

Partners in a business or LLP

Contractors or those on fixed-term consultancy agreements

Gig economy workers or side-hustlers with substantial self-employed income

Even if you have multiple income streams (say, part-time PAYE and part-time freelance), lenders may still classify you as self-employed depending on which is dominant.

How Much Can You Borrow If You’re Self-Employed?

Lenders usually base borrowing limits on your average income over the last two to three years, though some will consider your most recent year if your income is rising.

As a general rule, you can borrow around 4 to 4.5 times your annual income, depending on:

Your credit score

Your deposit amount

Your existing debts or financial commitments

The lender's individual criteria

For example, if your average self-employed income is £40,000 per year, you might be able to borrow £160,000 to £180,000 — possibly more with certain lenders.

What Documents Do Self-Employed Applicants Need?

This is where things get a bit more admin-heavy compared to employed applicants. Here’s a checklist of what most lenders will ask for:

SA302s (Tax Calculation Documents) — At least two years' worth from HMRC

Tax Year Overviews — To confirm the tax has been paid

Business Accounts — Prepared by a qualified accountant

Bank Statements — Typically 3–6 months of personal and business accounts

Proof of Deposit — Savings, gift, or income

ID and Address Verification — copyright, driving licence, utility bills

If you’re a limited company director, lenders may also look at:

Salary and dividends

Retained profits (some lenders only)

Director’s loans (if applicable)

Contractors may need to provide:

Contract history (12–24 months)

Current contracts and future pipeline

Daily or hourly rates (which can be annualised)

How Long Do You Need to Be Self-Employed?

Most lenders require at least two years of self-employed accounts or tax returns, though a growing number will consider just one year — especially if you have a strong track record or moved to self-employment within the same industry.

For example, if you worked as a graphic designer for five years and then went freelance, some lenders will see that as less risky than someone changing career paths entirely.

Having fewer than 12 months of trading history can be a significant barrier — in those cases, you may need to wait or seek a specialist lender via a mortgage broker in Nottingham.

How Lenders Assess Self-Employed Income

Here’s how different business structures are usually assessed:

Sole Traders / Partnerships
Lenders look at your net profit as shown on your SA302s and tax overviews. Some will average two or three years; others may take the most recent year.

Limited Company Directors
They typically consider your salary plus dividends. A few more flexible lenders may include retained profits — helpful if you leave money in the business rather than draw it out.

Contractors
Your income might be assessed based on your daily or hourly rate multiplied by the number of weeks you work annually (e.g., 48 weeks), assuming a stable history of contracts.
Example: £350/day × 5 days × 48 weeks = £84,000 annual income.

Common Challenges (and How to Overcome Them)

Getting a mortgage while self-employed can come with extra hurdles — but they’re manageable with the right preparation.

Fluctuating Income
Lenders prefer stability. If your income dropped one year but recovered, some lenders will still average over three years. Others might want an explanation from your accountant.

Gaps in Trading History
Even short gaps can raise questions. Be prepared to explain periods of inactivity (e.g. illness, sabbaticals, or switching industries).

Business Debt
Company loans or overdrafts can reduce the amount you’re eligible to borrow, so disclose them early and honestly.

Poor Record Keeping
Missing or inconsistent documentation is one of the biggest causes of delays or rejections. Hire an accountant if needed and get your paperwork in order.

Can You Get a Mortgage With One Year’s Accounts?

Yes — but your options will be more limited.

You’ll typically need:

Strong credit history

Clear, upward income trend

Evidence of future earnings (e.g., contracts or client retainers)

You’re more likely to succeed if:

You were previously employed in a similar role

You have savings or a larger deposit

You use a broker who knows which lenders accept one year’s accounts

How Big a Deposit Do You Need?

The standard minimum deposit is 5%, but putting down 10–25% will increase your chances of approval and unlock better interest rates.

Example:

House price: £250,000

5% deposit: £12,500

10% deposit: £25,000 (usually leads to better deals)

Self-Employed and First-Time Buyer?

You can still access first-time buyer benefits even if you’re self-employed:

No Stamp Duty on the first £425,000 of your purchase

Access to 95% mortgages under the Mortgage Guarantee Scheme

Use of a Lifetime ISA to boost your deposit with a 25% government bonus

Just be aware that some schemes have limited self-employed guidance — so again, professional advice helps.

Why Use a Mortgage Broker?

Self-employed mortgages are rarely “one-size-fits-all.” Every lender has different criteria, risk appetites, and documentation requirements.

Using a trusted mortgage broker in Nottingham gives you:

Access to lenders who specialise in self-employed cases

Help preparing your documents and application

Knowledge of which lenders accept retained profits or one-year accounts

Support navigating complex cases (e.g., multiple income sources, bad credit)

A good broker can save you time, stress, and potentially thousands in interest over the life of your mortgage.

Self-Employed Mortgage Tips

✅ Keep Your Accounts Up-to-Date — Hire an accountant and submit your tax returns early
✅ Build a Healthy Deposit — The more you can put down, the better your mortgage choices
✅ Check Your Credit Report — Clear any old debts or inaccuracies
✅ Separate Personal and Business Finances — Clean statements help lenders understand your finances
✅ Explain Any Irregularities — Add notes or ask your accountant to explain fluctuations

Final Thoughts

Being self-employed doesn’t mean being shut out of the housing market — far from it. With the rise of the gig economy, side hustles, and remote work, lenders are becoming more flexible and open to alternative incomes.

Yes, the mortgage process may take a little more planning, documentation, and patience, but it’s entirely achievable. Many self-employed people go on to become successful homeowners — you just need the right guidance.

Whether you’re a graphic designer, contractor, small business owner, or startup founder, speaking to a mortgage broker in Nottingham can help you understand your options and increase your chances of success.