Mortgage lenders traditionally are fond of stability and familiarity, and the more stable and familiar the circumstances of a particular borrower and a particular house they want to buy, the less risky they feel and the more likely they will be accepted for a particular mortgage product.

This means that for people who are looking for non-standard properties, such as apartments and elaborate conversions, or people who are contract workers or self-employed, getting a mortgage that enables them to get onto the property ladder can be quite tricky.

Many people have asked why are self employed mortgage applications, especially given that 4.2m people in the UK are self-employed, which means their primary source of income is from a business they own at least 25 per cent of.

There are several reasons, and by taking these into account and making preparations in advance, you can reduce the barriers to entry between you and the home of your dreams.


Lack Of Proof Of Employment

The biggest concern for lenders that stops them from approving self-employed mortgages at the same rate they approve other types of mortgages is based around stability or a lack of it.

Self-employment and contract work is seen as less stable and less of a sign of future earnings than full employment, even though 3.5 in every 1000 employees were made redundant between August and October 2021 and losing that secure source of income.

Despite this, lenders see one as more consistent than the other, but a similar level of consistency can be proven, and this can help to get approval for mortgages.

When applying for a mortgage as a self-employed person, you will need to provide:

  • Two or more years of SA302 forms or another relevant tax year overview,
  • Two or more years of accounts,
  • Six months worth of bank statements,
  • Evidence of upcoming contracts, dividend payments or retained contracts, depending on the type of self-employment you have.

If you can, provide accounts that have been prepared by a qualified, chartered accountant to confirm their reliability, and the calculations they will make regarding how much you will be able to borrow will likely be based on average profit over several years.

Having a good credit rating, being on the electoral roll and working with specialist brokers and lenders who work with self-employed people will also help you get the best rate.


The End Of Self Certification

The biggest reason why getting mortgages has become more difficult over the past decade is the outlawing of self-certification mortgages, a type of mortgage that was designed with freelancers, contract workers and other people with non-traditional income in mind, but were vulnerable to misuse.

The way they worked is that they allowed people with non-traditional sources of income to declare what their earnings were on an application without evidence, with the tradeoff being that they would be charged a higher rate due to being higher risk.

Unfortunately, they were misused by less scrupulous firms as a way to let people inflate their salaries and get bigger loans, causing financial difficulty and causing the Financial Conduct Authority to step in.

Whilst this regulation was beneficial, the lack of an alternative product designed with self-employed people in mind has made the pursuit of a dream home more complex for people who work for themselves.


For more information about any of our services, or if you have any questions including why are self employed mortgage applications are more difficult to get accepted, get in touch by calling us on 0203 3939 222.

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Hannah D
Hannah D
07:42 09 Sep 19
I would fully recommend Greg and Greenacre Financial Services. As a first time buyer I was daunted by the process of... finding the right mortgage for me however Greg made the process really simple, clear and quick. He was always available to answer any questions and happy to explain everything. I wouldn’t hesitate in recommending Greenacre FS to my friends and more
Jessica Cohen
Jessica Cohen
19:33 26 Aug 19
We first met with Greg in May for advice as we had adverse credit and irregular pay and didn't think a mortgage was in... our reach. Less than two weeks later Greg had fully arranged a great deal for us on our first mortgage. He was available whenever we needed him, 7 days a week and in the evenings. We cannot thank Greg enough for helping us buy our first home!read more
Seren Fletcher
Seren Fletcher
08:56 24 Aug 19
Would highly recommend Greg and Greenacre Financial Services. Was extremely professional and helpful. Our mortgage... wasn’t straight forward due to my husband being self employed but Greg was very knowledgable and managed to find us a really good mortgage. Looking forward to working with him again in the futureread more
13:24 23 Aug 19
Graham at Greenacre was excellent in helping me get a mortgage for my house purchase. He was always available when... needed, provided an efficient service and was very knowledgeable. Highly recommended!read more
Ian Hatter
Ian Hatter
11:07 16 Aug 19
What can I say, Greg has been absolutely amazing in sorting out a mortgage for me I never thought was possible. It has... meant I have been able to buy a house, a few months ago, I would never have dreamed of being able to buy after talking to high street lenders. He worked exceptionally hard and always kept me updated with every step of the process. Buying a house is extremely stressful, but Greg took all that stress away from me. I cannot recommend Greg enough to anyone looking to buy a property. Thank you so much for your help Greg, it's greatly more
Sean Kelly
Sean Kelly
15:27 30 Jul 19
10/10 EXCEPTIONAL service and result. Highly recommend. Greg and the Greenacre Financial Services team were fast,... knowledgeable, and honest. All the qualities you want and need. Very pleased I was recommended to Greenacre. Customer for life!read more
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