Self-employed mortgages are pretty much the same as any other mortgage.

However, the calculations for your income differ, as a lender will need to consider your type of employment and an income that is very likely variable.

While many high street lenders will offer self-employed mortgages, this is usually not their primary product. We find that specialist mortgage providers can offer exceptionally competitive rates, particularly when self-employed mortgages are their core type of lending.

The difference is that a lender will assess your income on an alternative basis.

Unlike an employed applicant, your income might be less stable or might fluctuate considerably. Therefore, a lender will usually work on an average of your earnings over the last two or three years.

This calculation is different with every lender; some lenders are less flexible, and so might cap the maximum they can lend on a strict basis. However, working with a whole-of-market broker such as Revolution Finance ensures that you only apply to lenders who offer excellent mortgage rates.

Every lender works differently, but they will have similarities in the factors they consider:

• Income - all mortgage providers will need to know how much you earn. Some will require a minimum of two or three years worth of accounts, whereas more niche lenders can consider self-employed applicants who have been in business for less than a year.
• Deposit - the size of the deposit is usually similar to a typical employment mortgage. The standard is around 10%. If your application is considered a higher risk, such as having been trading for a shorter period, a lender might ask for a higher deposit. There are also options such as using Help to Buy if you have a smaller deposit.
• Credit rating - lenders will look at your credit score and/or your credit history to evaluate your application. If you have bad credit, no doubt you will have a lower number of lenders to apply to. On the plus side, working with a specialist broker means you know who those lenders are, and can work with providers who offer niche bad credit mortgages for self-employed people.
• Age restrictions - some lenders have a maximum applicant age they will consider. Usually, this is around age 75, and sometimes up to age 85. Other lenders have no age limit and are more concerned with affordability.

Typically, lenders will be most comfortable with seeing two or three years worth of accounts to demonstrate your trading history.

However, some of the lenders that Revolution Brokers work with can consider an application after only nine to twelve months of trading. In that case, they will seek evidence about the security of the business, and look at contracts and other factors to ensure the income is sustainable.

Unfortunately not - reputable mortgage lenders have strict criteria about demonstrating ethical lending. Therefore, they are unable to offer to lend to a self-employed person who cannot prove how much they earn.

In most cases, you will need to show your lender accounts for at least the last nine to twelve months.

The longer you have been trading, and the more trading history you can provide, the more lenders you have to choose between, and the better the rates you will be offered.

If you are unable to provide sets of accounts, you might be able to apply for a second charge mortgage. This option only applies to applicants who have a mortgaged property, and wish to take out a second mortgage to release the equity owned.

Should you be struggling to demonstrate your income as a self-employed person, and be finding it difficult to secure a mortgage, contact the Revolution team.

You can, although with a bad credit history it is less straightforward. However, by working with an experienced broker, you receive advice about which lenders are worth applying to, which cannot accept bad credit applications, and where you will be offered the best rates.

Revolution works with several bad credit specialist lenders, who have a more flexible approach when it comes to assessing self-employed applications.

Usually, the decision is based on other factors such as:

• Your age
• How severe your credit issues are
• Why and when the problems occurred

It can be possible, in some circumstances, to secure a self-employed mortgage even if you have had many adverse credit issues.

Provided some time has passed since more severe issues - such as bankruptcies and repossessions - and you can demonstrate good financial responsibility since a broker can negotiate a competitive deal on your behalf.

We also support clients with reducing their risk profile and mitigating issues presented by your credit history. For example, if you can increase your deposit value, and produce at least three years worth of accounts, you have more options when it comes to self-employed bad credit mortgages.

You can, but it all depends on how long you have been trading for, and how closely you fit the other lending criteria.

Usually, it would be best if you waited until you have been trading for at least nine to twelves months. In that case, you'll still have fewer lenders to choose between - if you have been trading for two to three years, you will often receive much better rates.

If you are newly self-employed but have a previous history of work in the same industry, this can help strengthen your application.

Most lenders will look at your average earnings, and use this to calculate the maximum they can offer to lend.

Mainstream providers will usually ask for three years worth of accounts to calculate this average. Other more flexible lenders will look at the last two years, and a smaller number of niche providers will look at the last nine to twelve months of trading.

Lenders can vary significantly in the calculations they use:

• Most multiple your average annual earnings by 4.5 times.
• Some can lend up to five times your annual income.
• Others will lend up to six times your earnings in specific situations.

As an illustration: if you have been a freelancer for the last three years, and have accounts for each of those years, and earn an average of £30,000 per annum:

• Most self-employed lenders will lend up to £135,000.
• Some will offer you up to £150,000.
• Specialist lenders may lend up to £180,000.

The best way to maximise the amount you can borrow is to work with a whole-of-market broker who has experience in the self-employed mortgage sector.

Revolution Brokers work with clients who have had a great year of trading, but the two previous years were less successful. This can mean being offered a low mortgage maximum, even if you are now earning significantly more.

In this situation, our team would look to identify the right lender who is happy to consider one year's worth of trading in their calculations and help you find the mortgage of the value you need.

There are other factors to consider; some lenders vary in what income they determine as declarable. For example, some providers exclude bonuses and commission payments, whereas others will incorporate this income before they calculate your average annual income.

Again, this all depends on the lender and how you manage your business. Declarable income that a lender will include depends on your circumstances - for example, the calculation for a sole trader will be different than for a company director.

Here are indications of the type of income a lender will include, for each type of self-employed business:

• Sole trader - the net profit shown in your accounts, or your total income as reported on your self-assessment tax return (SA302).
• Partnership - your proportion of the net profits shown in the filed accounts, or your reported share of the income reported on your self-assessment tax return (SA302).
• Limited company - your director's salary, and any dividends received. Sometimes, lenders will look at the total business net profit if there are certain circumstances.

Depending on the lender, you can sometimes include other sources of income to supplement your self-employed business earnings - these can include:

• Investment income
• Rental income
• Income from Trusts
• Overseas capital earnings
• Earnings made in a different currency
• Bursaries or stipends received
• Pension benefits - whether personal, workplace or state pensions

Typically, self-employed applicants will share with a lender:

• Self-assessment tax returns (SA302s).
• Filed or finalised business accounts.
• Projects accounts or trading figures.

Most commonly, these need to cover the last two to three years, but some mortgage providers will be able to lend with evidence of a year's trading, and sometimes less.

Specialist lenders can also accept other forms of proof, such as:

• Payslips from your company, or family business.
• Handwritten payslips to evidence cash income.

You might also be asked to provide other documents, including:

• P60 forms
• References from employers
• Pension statements
• Benefit statements

To make sure you get the best interest rates on the market, you can:

• Save for as high a deposit value as you can.
• Check your credit report is accurate and up to date.
• Keep your accounts in good order.

The easier it is to verify your income, and process your application, the more likely it is to be approved.

As an independent broker, the Revolution team will also help you with preparing your personal finances before making an application - such as optimising your credit report and improving your credit score wherever possible.

Sometimes, we might advise on waiting for an issue on your credit file to expire before applying, taking out responsible borrowing to build up a credit history, or identifying errors in your credit report to have these corrected.