Getting a mortgage while self-employed
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Getting a mortgage while self-employed
Being a freelancer or running your own business comes with plenty of challenges – being accepted for a mortgage doesn’t have to be one of them.
While being self-employed means your mortgage application might need more evidence and paperwork, it doesn’t mean you’re not going to be accepted.
How to get a mortgage while you're self-employed
If you’re your own boss and apply for a mortgage, you will be getting the same mortgage that someone in salaried employment would get.
People in salaried employment can hand over their payslips and contracts to prove their income – not just in the past, but for the future. If you are self-employed, you might not be able to prove how much you’ll earn in the future.
This can be a challenge for business owners, freelancers and contractors, as income can change from month to month. Contractors aren’t always classed as self-employed, so check with your lender before applying if this is the case.
Before you apply, you’ll have to consider things like your:
Self-employed mortgage criteria
You may be considered self-employed by a lender if:
- You own shares in a business which forms your main income
- You’re a contractor or freelancer
- You’re acting as a director of a limited company
- You’re a partner in a partnership or limited company
- Sole trader – You own the business and keep all the profits.
- Partnership – You own a company with one or more people and share the profits.
- Limited company – You have set up a company that keeps your own money separate from your business.
Lenders will look at your application based on your business type. Freelancers can be classed as any of the above.
All these categories need to provide different types of evidence of your income.
Documents you will need
You’ll need to provide the following documents if you’re applying for a mortgage while self-employed:
- Tax calculations and tax year overview (SA302) – These show your earnings and the tax you’ve paid. You will get these when you fill in your self-assessment tax return.
- Evidence of upcoming contracts – If you have work coming up, it might be helpful to share this with your lender.
- Salary and dividend payments – If you are the director of a limited company, lenders will need to see how much you are paying yourself.
Lenders will want to know your profits and how these have changed over the years. This will show them that you are earning a steady income and can make regular repayments.
Here are a few common questions you may have when applying for a mortgage when self-employed.
Can I get a mortgage with a self-employed partner?
Yes, but they will need to provide evidence of earnings and future earnings. If your partner is self-employed, they will need to prove that they can make regular mortgage payments.
How much income do I need to get a self-employed mortgage?
There is no set amount that you have to earn to be accepted for a mortgage. You’ll need a good credit rating, a 5-10% minimum deposit and a steady taxable income that means you can make the monthly repayment comfortably.
Do self-employed people pay higher interest rates?
No, not always. If you can prove you can pay back your mortgage and have a good credit rating and deposit, you won’t necessarily pay a higher interest rate.
Can I get a first time home buyer mortgage while self-employed?
Yes, it’s no different whether you’re buying your first or second home when you’re self-employed. As long as you have a strong deposit, have a good credit rating, evidence of taxable income and can make the monthly repayments, you may be able to get a mortgage.
Calculators & tools
We have a range of mortgage calculators to help you:
- Find out how much you could borrow from Lloyds Bank
- See how much you could save if you make overpayments on your mortgage
- Get an idea how a change to the Bank of England Base Rate could effect your monthly payments
Important legal information
Lloyds Bank plc. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 2065. Lloyds Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278.
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