10 Ways To Arranging Mortgages For Self-Employed Customers

December 5, 2023

Arranging Mortgages For Self-Employed Customers

The landscape of the workforce is changing, with more individuals than ever embracing self-employment and the flexibility it offers. However, when it comes to major financial commitments like mortgages, self-employed individuals often find themselves navigating a labyrinth of complexities. The fluctuating nature of self-employed income, alongside stringent lending criteria, can present unique challenges. But these hurdles should not deter self-employed individuals from pursuing their dream of owning a home.

With the right guidance and understanding, the process of arranging mortgages to self-employed customers can be demystified and made more accessible. This guide aims to provide practical and actionable advice to aid self-employed individuals in overcoming the common obstacles they may face. From preparing financial documents to understanding lenders’ criteria, these tips are designed to provide clarity and support. The key is to approach the process with the right tools and knowledge, making what can seem like an overwhelming task, a feasible and achievable goal.

1. Prepare Your Financial Documentation

Thorough and up-to-date financial documentation is essential for self-employed individuals seeking a mortgage. This should include at least two years of full accounts, SA302 tax calculation forms, and bank statements. These documents give lenders a clear picture of your income consistency and reliability. Additionally, having a well-organised financial portfolio can speed up the application process and enhance your credibility in the eyes of lenders. It’s advisable to have these documents reviewed by a financial advisor for accuracy and completeness.

2. Improve Your Credit Score

A strong credit score is vital, particularly for self-employed applicants. Ensure you’re on the electoral roll, pay off outstanding debts, and avoid new credit applications before your mortgage application. Regularly checking your credit report for errors and addressing them promptly can also positively impact your score. Building a good credit history by using and repaying credit responsibly over time can significantly boost your appeal to lenders.

3. Save For A Larger Deposit

Lenders often view self-employed borrowers as higher risk, so saving for a larger deposit can be beneficial. A substantial deposit not only reduces the loan-to-value ratio but also demonstrates financial discipline and commitment, making your application more attractive to lenders. Additionally, a larger deposit can often secure more favorable mortgage rates, potentially saving you money over the term of the loan.

4. Get Professional Help

Seeking advice from a mortgage broker who specializes in arranging mortgages for self-employed customers can be invaluable. They can guide the best lenders to approach and help prepare your application. Brokers often have access to deals not available on the open market and can negotiate terms on your behalf, leveraging their expertise and industry connections to your advantage.

5. Maintain Steady Income

Showing stable income can significantly improve your mortgage approval chances. Try to demonstrate consistent work and income for at least two years before applying. If your income varies significantly, prepare to explain these fluctuations. Having contracts or letters of intent for future work can also reassure lenders of your ongoing earning potential.

6. Consider Different Lenders

Different lenders have varying criteria for self-employed mortgages. High street banks might be more conservative, while specialist lenders may offer more flexibility. Research various options to find the best fit for your situation. Sometimes, smaller or niche lenders are more willing to consider individual circumstances and offer tailored solutions.

7. Understand How Lenders Assess Income

It’s crucial to know how lenders will assess your income. They might look at your average income over the past few years, or focus on your most recent year. Understanding this can help you present your finances more favorably. Be prepared to provide additional documentation or explanations to give lenders a complete understanding of your income situation.

8. Keep Personal And Business Expenses Separate

Ensure your personal and business finances are separate for clarity and simplicity. This separation makes it easier for lenders to assess your personal income and spending habits, leading to a smoother application process. Clear differentiation between personal and business expenses can also provide a more accurate reflection of your disposable income, crucial for mortgage affordability assessments.

9. Be Mindful Of Tax Deductions

While minimizing taxable income can reduce tax liability, it can also lower the income assessed by lenders. Be strategic about tax deductions in the years leading up to your mortgage application. Sometimes it’s worth paying a bit more in tax to show a higher income, thereby increasing your borrowing potential with lenders.

10. Research Mortgage Rates And Products

Research different mortgage rates and products thoroughly. Interest rates, fees, and terms can vary significantly. Finding the right product can save you money in the long term. Consider various mortgage types, like fixed-rate or tracker mortgages, and weigh their pros and cons in relation to your financial situation. Staying informed about market trends can also help you lock in the best rate possible.


Navigating the mortgage market as a self-employed individual can indeed seem like a daunting task, but it’s far from impossible. With careful planning, a strategic approach, and the right guidance, securing a mortgage can be as achievable for the self-employed as it is for those in traditional employment. The key is to approach this journey with patience and perseverance. Understanding that each step, from preparing financial documents to researching mortgage rates, is integral to building a strong application that resonates with lenders.

In an evolving financial world that’s increasingly accommodating diverse income streams, self-employed individuals have more resources at their disposal than ever before. Embracing these resources, coupled with a thorough understanding of the mortgage process, can significantly increase the chances of a successful application. Remember, the path to securing a mortgage as a self-employed individual might require extra steps, but each step brings you closer to achieving your goal of homeownership. Stay informed, seek expert advice, and maintain resilience throughout the process. Your dream home is not just a possibility, but a reachable destination.

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Ankita Tripathy

Ankita Tripathy loves to write about food and the Hallyu Wave in particular. During her free time, she enjoys looking at the sky or reading books while sipping a cup of hot coffee. Her favourite niches are food, music, lifestyle, travel, and Korean Pop music and drama.

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