Self-Employed Mortgage Hub
Specialist mortgage advice for sole traders, partnerships and contractors in Brackley, Northamptonshire, Buckinghamshire & Oxfordshire.
If you’re self-employed, your income doesn’t always neatly fit into the boxes that high-street lenders and online calculators like to use.
At Thomas Honour Mortgage Services, we understand the challenges that self-employed clients experience when securing a mortgage, and we have many years of experience in finding mortgage solutions when others said no.
This hub is specifically for:
- Sole traders
- Partnerships
- Salaried (PAYE) Partners of LLPs.
- Construction Industry Scheme (CIS)
- Contractors
(If you operate through a limited company, our Business Owner & Limited Company Director Mortgage Hub will usually be more relevant.)
When it comes to getting a self-employed mortgage, many people are told:
“Come back when you’ve got another year of accounts.”
“You don’t earn enough on paper.”
“The figures are too inconsistent.”
This hub explains how lenders assess self-employed income, what makes the biggest difference to the outcome, and how the right structure and lender choice can open doors that initially appear closed.
Sole traders (Self-employed)
A sole trader is anyone who has earned more than £1,000 from their own business in a tax year, which runs from 6th April to 5th April.
Each lender may assess sole trader income slightly differently. Different lenders may use:
- One year’s net profit
- A two-year average of net profits
- The latest year’s net profit
This means self-employed people can receive very different borrowing outcomes depending on which lender is chosen.
Key documents required for a self-employed mortgage typically include:
- SA302s
- HMRC Tax Calculations
- HMRC Tax Year Overviews
- Business bank statements
- Accountant’s certificate
Is it possible to get a mortgage with one year's income?
Yes, in some instances, it is possible to obtain a mortgage with just 1-year’s proof of income.
Some lenders will consider sole traders with:
- Just 1 year’s tax return
- Less than 2 years trading
Case Study - Sole trader with one year's income
The Background
Our client had recently left employment to start their own business in the same industry they had worked in for several years.
He was a sole trader, had just one tax return and had been rejected by their own bank, who told them they needed a minimum of 2-years tax returns before they could be considered.
What We Did
We worked closely with a lender that was happy to consider just one year’s tax returns, as the applicant had previous experience in the same industry and was able to obtain a letter from his accountant, who provided a positive projection for the next year.
Fluctuating or Declining Profits
A common challenge for self-employed people is trying to get a mortgage when their income fluctuates.
We work closely with some lenders that may consider an application subject to:
- A clear and viable reason for fluctuating or declining profits (such as reinvestment in the business or purchasing equipment)
- Your latest 3 months’ business bank accounts show profits
- Your profit has not declined for 3 consecutive years in a row
Case Study – Fluctuating Profits
Background
One of our clients was a sole trader and struggling to obtain a mortgage as his net profits fluctuated.
- Year 1: £55,000
- Previous Year: £31,000
- Latest Year: £54,000
Many lenders would take a two-year average of the latest and previous years’ net profits, meaning the averaged income being used for affordability would be £42,500
What we did
We listened to the clients to find out that the reason for the decline in the previous year was due to investing in a new vehicle for the business. However, the underlying turnover remained strong, and trading activity had not slowed.
We worked with their accountant to obtain:
- A written explanation confirming the vehicle purchase
- Confirmation that this was a one-off capital investment
- Evidence that trading levels remained healthy
- Confirmation that profits had stabilised in the latest year
We then presented the case to a lender who used a common-sense approach and was prepared to assess affordability using the latest year’s net profit of £54,000, rather than averaging the latest 2 years.
This resulted in the self-employed client being able to obtain the required mortgage to purchase their desired property.
Partnerships
Simple partnerships are where two or more owners share the business’s profits, and each partner pays tax on their share.
For partnership income, lenders will usually assess affordability based on:
- Your personal share of net profit
Different lenders apply different rules.
Salaried (PAYE) Partners
Salaried Partners of LLPs (Limited Liability Partnerships) are often, but not always, professionals such as accountants, solicitors, barristers, doctors, and dentists.
If you are a salaried partner, lenders will assess affordability based on one of two ways:
1) Your personal share of net profit
Key documents required for a mortgage as a partner, based on equity share, typically include:
- Partnership accounts
- Latest 3 months’ bank statements for the partnership
- In some cases, an accountant’s certificate
or
2) Your PAYE salary
Key documents required for a mortgage as a salaried partner typically include:
- Latest 3 months’ pay slips and latest P60
- Latest 3 months’ personal bank statements
Different lenders assess partners’ affordability differently.
Case Study – How we maximised affordability for a Salaried Partner of an LLP
Background
Our client was a salaried partner of an LLP. He had a gross annual salary of £70,000 and an equity portion of 60%.
He approached us as he was told by another mortgage broker that, as his income comes from an LLP, his affordability would be based on his share (60%) of net profits, averaged over the previous 2 years, not his current salary.
The 2-year average of his share of net profits was £42,235, meaning he could borrow in the region of £189,635.
What we did
We sourced a lender that agreed to assess his affordability based on his PAYE salary of £70,000 per annum. He provided 3 months’ pay slips to evidence the salary, meaning he could borrow up to £314,300 and purchase the desired property.
Construction Industry Scheme (CIS)
Whilst technically self-employed for tax purposes, some lenders will treat CIS workers as employed for mortgage purposes, which often simplifies the process.
Every lender treats CIS income slightly differently, but we will match you with a lender that suits your individual circumstances.
Below are the different ways a lender may assess affordability for CIS workers:
- In some cases, only 3 months’ income is required.
- Some lenders may require up to 12 months of history
- Some lenders treat you as self-employed and require two years’ tax returns
Case Study – CIS Subcontractor with no tax return
Background
Our client was a plumber who had been subcontracting via CIS for 9 months.
As he is technically self-employed, many lenders would require him to have up to two years’ tax returns to evidence his income. But, he was yet to complete his first tax return.
What we did
We approached a lender that was able to accept his latest 3 months’ CIS pay slips and bank statements to verify his income. An average of the latest 3 months’ income was used.
This resulted in him being able to obtain the required mortgage to purchase a property much sooner than expected.
Contractors
If you’re a contractor, it can be a frustrating process trying to obtain a mortgage, as you often will not tick the traditional employed or self-employed boxes.
We can help you if you are a:
- Day-rate contractor
- Umbrella company contractor
- Contractor who pays their own tax (including IR35)
Frequently asked questions
It really depends on your overall circumstances, but typically, most lenders will require a minimum of 5% deposit. However, the larger the deposit the lower the interest rate usually is.
Potentially, yes – depending on lender criteria and overall strength of the case.
This varies widely. Some use the latest year, some average, and some take the lower of the two.
If there is a viable reason for the decrease, then some lenders can consider this.
This varies from lender to lender. In some cases, yes, but each lender has different requirements.
Yes, we have lenders that will accept your latest 3 months’ pay slips and P60 to verify your income.
Sometimes, but not always. Have a chat with a mortgage professional who can give you the right advice.
Yes, in some cases, lenders only require your latest 3 months’ pay slips and bank statements to evidence your income.
Either your percentage share of net profits via the company accounts or your PAYE salary via pay slips, whichever is more beneficial.
Yes, if you are a day-rate contractor, some lenders will use your daily contract rate. EG. To calculate your annual income, they will use their daily contract rate x5 x 46-48 weeks.
How we approach self-employed mortgages
When we help a self-employed client, the process is strategic rather than purely rate-driven:
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Income analysis
Assessing the best way to leverage your income to maximise affordability
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Lender selection
We recommend the lenders who understand self-employed people to maximise the chances of getting your mortgage approved.
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Why work with Thomas Honour Mortgage Services if you are Self-Employed?
At Thomas Honour Mortgage Services, we understand that applying for a mortgage when you are self-employed can feel more complicated than it should be. Income can fluctuate, accounts can be interpreted in different ways, and not all lenders assess self-employed applicants using the same criteria.
Our team specialises in helping self-employed clients navigate these challenges, guiding you through the process from start to finish. We focus not only on finding a competitive mortgage deal, but on ensuring your income is assessed most appropriately based on how your business operates.
As a mortgage broker based in Brackley, we regularly help sole traders and partners across Oxfordshire, Buckinghamshire, Northamptonshire and London secure mortgages that reflect the true strength of their income.
We regularly help with:
- Mortgages using one year’s income
- Cases where profits have declined in the latest year
- Partners who need to use a PAYE salary for mortgage affordability
- Sub-contractors that are paid via the Construction Industry Scheme (CIS)
- Day rate contractors to use the value of their contract for affordability
Next step
Let Thomas Honour Mortgage Services be your trusted partner in structuring your mortgage around your self-employed income.
Contact us today and experience the difference specialist advice can make.