For self-employed sole traders in the UK, securing a mortgage can feel like jumping through hoops while blindfolded. While the reality isn’t quite that dramatic, it is true that lenders scrutinise self-employed applicants more closely — not because they dislike entrepreneurs, but because income isn’t as easy to verify or predict.
That said, being self-employed doesn’t put you at a disadvantage if you’re properly prepared. Thousands of sole traders successfully get mortgages every year, often on excellent terms. The key lies in understanding what lenders look for — and putting yourself in the best possible position before you apply.
Here’s how to approach the mortgage process as a sole trader, with confidence and clarity.
What Do Lenders Want to See?
Put simply, lenders are looking for stability and sustainability. As a sole trader, you’ll typically be assessed on your net profit (not turnover) over the past two years, though some lenders may accept just one year with strong mitigating factors.
Key criteria include:
- Consistent or rising income over time
- A clean credit file
- A solid deposit (usually 10%+)
- Proof that your income ongoing or likely to continue
Unlike employees who can show a payslip and contract, you’ll need to provide a bit more.
Documents You’ll Likely Need
Be prepared to provide:
- Two years of SA302s (from HMRC) or tax calculation summaries
- Corresponding tax year overviews
- Business bank statements (typically 3–6 months)
- Proof deposit (bank statements and gifted deposit letter if applicable)
- ID and proof of address
Some lenders may also request an accountant’s certificate, especially if your income structure is more complex or you’ve made significant adjustments (e.g. capital allowances or large one-off costs).
What About Only Having One Year of Accounts?
Getting mortgage just one year of self-employment trickier — but not impossible.
Some specialist lenders will accept this if:
- Your trading history is strong
- Your credit profile is clean
- You have a larger deposit (15% or more helps)
- Your income is well-documented and appears sustainable
In cases, working with a mortgage broker is critical. A good broker knows which lenders are open to newer businesses and how to present your case properly.
Tips Improve Your Mortgage Chances as Sole Trader
1. Keep Your Finances Clean and Simple
Mixing personal and business expenses in one account? Stop now. Lenders want to see clear, traceable income and spending. Keep personal and business banking separate, and ensure your bookkeeping is up to date and accurate.
2. Use a Reputable Accountant
An accountant who understands mortgage requirements can make a huge difference. They can help produce the right documents and give lenders confidence in your figures — especially when explaining fluctuations or one-off anomalies.
3. Don’t Over-Minimise Your Taxable Income
Yes, we know — no one wants to pay more tax than necessary. But if you’re aggressively writing down your income to reduce tax, you might also be shrinking your borrowing power. Remember: lenders base affordability on your declared net income. If your accounts show £15k a year to save tax, that’s all they’ll lend against.
4. Get Your Credit File Top Shape
Before applying, check your credit report with the major agencies (Experian, Equifax, TransUnion). Fix any errors, pay down high balances, and avoid taking out new credit. Lenders will use this to assess your reliability, especially if income is variable.
5. Save a Decent Deposit
While 5% deposits exist, having 10–15% (or more) can open up better interest rates and reduce lender scepticism. A strong deposit also helps offset any perceived risk related to self-employment.
6. Get an Agreement in Principle (AIP) First
Before house-hunting, get an AIP — especially through a broker who can place you with a lender that understands self-employed cases. It shows estate agents and sellers that you’re serious and eligible.
Common Pitfalls to Avoid
- Inconsistent income: If profits are falling year-on-year, be ready to explain why. Lenders may average income or take the lower figure.
- Using the wrong lender: Not all lenders understand or favour self-employed applicants. The best deal on a comparison site might not be the best for you.
- Applying too early: If your latest tax return hasn’t been submitted yet, your most recent income won’t count — wait until your latest year is documented and available.
Ignoring affordability checks: Your declared income still needs to meet affordability criteria, even with a big deposit.
Final Thought: Preparation is Power
Getting a mortgage as a self-employed sole trader isn’t harder, it just requires a more proactive approach. By preparing your documents, working with a knowledgeable fee free broker, and understanding what lenders want, you can navigate the process smoothly and confidently.
If you’re planning to apply in the next 6–12 months, now is the time to get your books in order and talk to a broker who specialises in self-employed mortgages. A little preparation now can mean a much smoother process later — and potentially thousands saved over the life of your mortgage.
