Self-Employed Mortgages Specialist Hub

The way lenders calculate self-employed income varies dramatically. Some use your latest year's net profit, others average two or three years, and some use the higher of these figures. For company directors, the calculation is even more complex—some lenders assess salary plus dividends, while others can use salary plus share of net profit before tax (known as 'retained profits').

Documentation is critical for self-employed applications. At minimum, you'll need SA302s (tax calculations) and tax year overviews from HMRC for 2-3 years, along with corresponding accountant-prepared accounts. Company directors also need company accounts and confirmation of shareholding. Having these documents ready before applying prevents delays.

Business expenses can sometimes be 'added back' to your income for mortgage purposes. Certain lenders allow adjustments for personal vehicle finance included in business accounts, pension contributions, depreciation, and one-off costs. This can significantly increase your usable income figure, making lender selection crucial.

New businesses with less than two years' trading history aren't automatically excluded. Some lenders accept one year's accounts from established professionals (accountants, solicitors, doctors) or those with relevant industry experience. Contractors working through their own limited company may be assessed on day-rate rather than company profits if they have contract evidence.