A self employed mortgage broker who reads your accounts

Is it difficult to get a mortgage if you're self-employed?

It is harder if you go to the wrong lender. Matched to one built for variable income, it is a normal process rather than a difficult one. Most lenders are designed around a single payslip and a stable monthly salary, which self-employed people and self employed applicants rarely have. Income can vary month to month or year to year, and an underwriting team without much practice reading accounts can misjudge it badly.

A broker who lives in this market daily knows which lenders are genuinely comfortable with variable income, and which will take a contractor's day rate at face value rather than picking it apart. Getting this wrong at the outset costs weeks; getting it right first time is the whole point of using a self-employed mortgage adviser. Your adviser sees far more self employed and business-owner cases in a month than a branch does in a year.

Not all mortgage advisers are whole-of-market either: one tied to a single lender's range can only ever offer what it is willing to sell. A whole-of-market broker compares mortgage products across dozens of lenders, including several that do not deal directly with the public at all, and gives honest mortgage advice on which one genuinely fits your situation. Montgomery Financial is a credit broker, not a lender, is regulated, and works with self employed business owners near Wellingborough and across Northamptonshire who want a broker who understands how much you can borrow when your income does not arrive as a single monthly payslip.

How long do you need to be self-employed to get a mortgage?

Most lenders want two to three years of certified accounts as standard, though a smaller number will consider a single year if the rest of the application is strong. Two full years remains the norm, so if you are close to filing a second set it is often worth a conversation about timing before you apply.

Getting a mortgage when self-employed with one year of accounts

Yes, it is possible to get a mortgage with just one year of accounts in the right circumstances. A small number of lenders will accept it, particularly if income is strong and you have a healthy deposit, though most will also want relevant employment history in a similar line of work beforehand. For a newer or recently incorporated business it is a genuine route rather than something you only hear about after being turned away elsewhere.

Just started trading, switched structure, or no full accounts yet?

If you have recently gone from being employed to running your own business, switched your structure to a limited company, or you are a contractor without a full set of accounts, you are not automatically shut out. Meeting a specialist lender's self-employed mortgage requirements is about presenting the right evidence, not extraordinary luck. Some will still consider you provided you have worked in broadly the same trade beforehand; others look at projected income and a healthy deposit rather than insisting on finalised accounts. It is a more detailed conversation than a standard application, and exactly where a specialist mortgage broker who has handled self employed cases before earns their keep.

How lenders calculate self-employed income

A sole trader is usually assessed on net profit rather than turnover, which catches out a lot of self employed individuals and business owners who have not planned for it. A company director is typically assessed on salary and dividends, though some will also count retained profit left in the company. That detail can genuinely change how much you can borrow, and it is one most branch staff will not think to check.

Most lenders average self-employed income over several years, so a strong recent year can be outweighed by a weaker earlier one unless we choose a lender that weights the latest year more heavily. Lenders will take the view their own criteria dictate, and those criteria vary depending on the lender far more than people expect.

Contractors, IR35 and day-rate income

If you contract through your own company, your options depend on how a lender treats your contract. Some will assess you on your gross day rate and contract history rather than digging through company accounts, which can work in your favour if the accounts do not yet reflect your full trading pattern. Others insist on treating you as a standard company director. A change in IR35 status, a gap between contracts, or a recent move to a new agency can all affect who will consider you, which is exactly the sort of detail a broker who works with contractors day to day already knows how to present properly.

How to improve your chances of approval as a self employed applicant

A handful of small things improve your mortgage chances more than people expect, and none of them are complicated once you know what it takes to qualify for a mortgage as a self employed business owner.

• Check your credit history early and correct anything wrong on it
• Keep bank statements free of excessive personal borrowing
• Have accounts prepared by a proper accountant rather than rushed at the last minute
• Keep business and personal spending clearly separated
• Be upfront about a recent change in structure, a one-off quiet year, or a dip in income

Lenders will take a dim view of accounts that are hard to follow. Being open about your personal circumstances lets us pick a lender who will not be surprised by them later, and boosts your chances of getting a swift decision.

Can you still state your own income?

No. Mortgages that let borrowers simply declare their income without proof were withdrawn from the market from 2008 and banned outright by the Mortgage Market Review in 2014. Every mortgage today is assessed on evidenced, affordable income, which is exactly why proper preparation of accounts matters so much more than it used to.