If you’re self-employed with less than 2 years’ worth of accounts to show to a mortgage lender, you might find it more difficult to get mortgage approval than someone who is in full-time employment or has more than three years of documentation. In these circumstances, lenders will usually require additional evidence so they can assess your affordability and eligibility. Although it may be more difficult to get a self-employed mortgage with just 1 years accounts, it’s certainly not impossible, although by no means guaranteed. There are many lenders on the market today who specialise in self-employed mortgages for people with limited accounting history or have some difficulties providing evidence of regular income.


Who can get this type of mortgage?

If you are a company, sole trader, contractor, or self-employed individual, you should be able to apply for a self-employed mortgage. To determine whether someone qualifies as ‘self-employed’ for this purpose is usually determined by whether they own 20% or more of the business or company they are working for.

These types of mortgages may also open to self-employed individuals who are wanting to purchase a buy-to-let property, owners of a business that has recently undergone structural changes, or if you have been self-employed for one year and have bad credit.

Even though getting a mortgage with 1 year of accounts may be possible, you might need the help of a specialist adviser, like one of our team at Finance Advice Centre, to help you towards obtaining a loan with limited accounting references. This is because lenders will want to minimise their risk and be confident that you can meet your mortgage repayments.

If you have less than 3 years’ accounts, some lenders may consider that you don’t have enough background for them to get enough of an insight into your business, or cannot conclude that your income is stable enough to meet the repayment requirements.

Going through a professional adviser from Finance Advice Centre can benefit you in a variety of ways, not least of which is making sure you have all the correct documentation and evidence ready for your mortgage application, as well as getting your details before lenders who may be more inclined to approve your loan. This avoids having your time and effort wasted with multiple declines which could also have an impact on your credit rating.


Do I need to work in a particular area or industry?

When lenders are considering mortgage applicants, generally they are only looking at whether you have a sufficiently stable income to be able to afford the repayments for the length of your mortgage term. With this in mind, as long as you are able to provide evidence that a sustainable income is being generated by your business, lenders are usually unlikely to be concerned about the nature of your business. A mortgage lender’s job is to assess affordability, not to judge your business model or industry, except in highly specific circumstances.


Before you apply

Before applying for a self-employed mortgage, it’s advisable to make sure you have all your accounts in order and that you have spoken to one of our specialist advisers about any extra evidence or documents you may need to provide in support of your self-employed mortgage application. 


As a mortgage is secured against your home or property it could be repossessed if you do not keep up the mortgage repayments.