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Self-Employment and Lending

If you happen to be self-employed, you may not find it so easy to apply for loans as usual.

Lenders do sometimes see self-employed loan applicants as a heightened risk, thanks to the fact that income is not always guaranteed. While self-employed contractors and freelancers may find it a little tough to get a mortgage, it is by no means impossible.

If you’re planning on buying a new home, re-mortgaging or getting a loan then there is always help available to you

How to get a mortgage if you’re self-employed

First off, you will need proof of income.

Lenders will ask for at least two years’ of accounts to back this up this will show the lender that you have been able to manage you r money for 24 months and may give them an insight in to any months that you may struggle. You may need your tax returns at this stage too.

You may also need to provide a track record of regular work, and having a good credit history will help out a great deal. If you have a good deposit to hand also increases your attractiveness to lenders. As of January 2014 there are some new laws that come into effect that mean less documentation is needed when you apply for a mortgage.

Lenders will often prefer self-employed applicants to have an accountant. Of course, make sure your accounts are up to date before you even think about applying.

If you have some documentation of work lined up in the future, this will count favourably too.


If you want to re-mortgage, speaking to your lender and they should be able to help you out. If you have not defaulted on any previous payments, there’s unlikely to be any issues. Any change in circumstances will be looked at though.

Keeping your credit rating good is essential for getting the best rates on mortgages. The poorer your credit rating is the higher you will end up paying. That is if you are accepted for a mortgage or re-mortgage at all with your credit rating.

What’s your business set up?

Sole trader – A lender will look at your profits when assessing your eligibility for a loan. Since a sole trader works by him or herself, keeping accounts is usually a straightforward affair. They may insist on insurances to help with repayments if you become ill or unable to work.

Partnership – In the case of a partnership, lenders will assess each partner’s share of the profits. You will need to prove exactly how much money you – not your partner – earn. This may not be a straight 50/50 split so any contracts that you have between your partners and yourself may be asked for.

Limited company – This simply means that your personal affairs are kept entirely separate from your business. Directors pay themselves a salary and dividend payments – both of which will be considered at a mortgage application.

Taking credit out in any situation may be good for you, whether it be a credit card, loan or mortgage. The key is to make sure that you read the small print and are well advised as debts can mount if  you are unable to repay them.