Almas Uddin
Founder and Mortgage Advisor
18 Dec 2023
Trying To Find an Affordable Self-Employed Mortgage?
Our guide to self-employed mortgages at affordable rates runs through everything you need to know about getting a mortgage as a self-employed person and how to negotiate the best possible terms!
Remember, the cheapest self employed mortgage isn't always the best - you need to look at things like arrangement fees and annual charges, not only the interest rate publicised.
Likewise, as a self-employed applicant, you must apply to a suitable lender who will consider your average income favourably.
For tailored support with finding self-employed mortgage lending, contact the Revolution team at [email protected] or give us a call on 0330 304 3040.
Who Can Apply for a Mortgage Self-Employed?
The Revolution Brokers team works with clients every day who have found it challenging to secure a mortgage offer or are unsure which lenders to apply to.
As a self-employed professional, it is crucial to work with an experienced broker who can negotiate beneficial rates and terms for you - we work with:
- Sole traders
- Partnerships
- Limited companies
Suppose you fall into any of these categories. In that case, you might have found it complicated to apply for a mortgage when your income is variable and less easy to demonstrate than an employed applicant with regular monthly payslips.
There isn't a set definition of a self-employed person, so if you have a business of any type, submit self-assessment tax returns, and demonstrate your average income, your mortgage application will fall into this category.
Let's run through how self-employed mortgages work and what to look out for.
How Do Self-Employed and Mortgage Applications Work?
In essence, a self-employment mortgage is no different than any other. However, it usually refers to a mortgage that has been adapted to meet the income structure of a self-employed professional.
There is no reason you cannot apply for the same competitive rates and terms as any other applicant - but the trick is in understanding how the calculations work and which lenders to apply to!
The most significant difference is in the income calculations. Lenders will look for proof of your trading income from your accounts. Mainstream lenders will almost always need to see at least two to three years worth of accounts, although more specialist providers can work with self-employed people with shorter trading histories.
Income calculations take your average annual salary and multiply it - usually by four times - to arrive at the maximum amount they can offer to lend.
How Do I Apply to Self-Employed Mortgage Lenders?
The application process shouldn't be significantly different - but you will need to look at how much trading history the lender requires and demonstrate your income.
Deposits are usually similar to those required from employed applicants, with the sector average being a minimum 10% deposit.
Some lenders can accept as low as a 5% deposit, depending on your other circumstances.
You might be asked for a higher deposit if any of your circumstances make your application higher risk - for example:
- You have been trading for one year or less.
- Your income has changed significantly in recent years.
- You have a bad credit history.
The best way to begin the mortgage application is to seek support from an expert broker who understands the self-employment income structure and can ensure you apply to the right lenders who can offer to lend to you.
There aren't any lenders who exclusively lend to self-employed people. Instead, there are hundreds of options from high street banks to niche providers - the best solution is to work with an independent broker who can recommend the best lender to meet your mortgage requirements.
When Applying for a Self-Employed Mortgage How Much Can I Borrow?
The exact amount you can borrow depends on your income and how the lender calculates those earnings.
Most will offer up to about 4.5 times your annual income, but others have lower or higher multiples, so it's impossible to give a fixed amount that is the most you can borrow on a self-employed mortgage.
Lenders also have varying criteria, so they might offer a lower-income multiple if you've been self-employed for a shorter period, for example.
If you need to borrow a set amount to purchase your property, give us a call, and we'll advise the suitable lenders for your application.
Step by Step - Applying to Self-Employed Mortgage Lenders
If you're looking for a mortgage as a self-employed person, the first step is to contact Revolution Brokers.
Our friendly team will arrange a good time to discuss what you're looking for, how much you need to borrow, and any other important factors such as timeframes, employment status, and the property you wish to buy.
After we've established a good idea of your mortgage needs, the Revolution Brokers team scours the whole mortgage market to identify the best deals and shortlist the right lenders and best rates available.
As an independent broker, there are no limits on the type of bank or lender we might recommend, and this is wholly dependent on which self-employed mortgage product we think offers the best value for you.
When you've selected a mortgage lender, our team will work with you to proceed, collate all the information, and make sure your application makes it through to final approval.
Can I Get a Santander Self-Employed Mortgage?
Many banks and providers offer self-employed mortgages, so you might wish to apply through a familiar lender.
However, it's well worth contacting Revolution if you're concerned about the interest rates available or want to keep your mortgage costs down.
Buying a property can be expensive, so finding a lower interest rate can make a world of difference in your repayment charges and monthly interest.
It's always wise to consult a whole-of-market broker to assess whether the rates you're considering are as competitive as you think - or whether an alternative lender could offer a more affordable option.
How Can I Increase My Approval Chances with Self-Employed Mortgage Lenders?
You can boost your chances of mortgage approval - and drive down the interest rates offered by mitigating the risk for your lender.
In short, you want to provide as much information as you can to ensure they are in no doubt that you can afford the repayments.
Other ways to reduce the lender's self-employed mortgage risk and improve the affordability of your quotes rates include:
- You can access your credit report, request any errors be removed, and improve your rating by registering on the electoral roll and paying off short-term debt.
- Looking for standard bricks and mortar properties and steering clear of anything non-standard or flats about shop premises that are a trickier prospect.
- Saving for as large a deposit as possible.
Of course, the best way to have a self-employed mortgage application approved is to work with a specialist mortgage broker such as Revolution.
We negotiate with lenders on your behalf to ensure you secure the borrowing you need at the best rates on the market.
Expert Support Being Self-Employed and Mortgage Ready
The business finance broker team specialises in self-employed mortgages and works with a vast network of UK lenders who offer favourable terms and flexible mortgage rates.
For more help and information, please look through our other self-employment guides, or give us a call on 0330 304 3040.
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