Documents Needed for a Self-Employed Mortgage

Documents Needed for a Self-Employed Mortgage

Self-Employed applicants don’t require a special type of mortgage product, they have access to the vast majority of the mortgage products currently on the market. The only noticeable difference between an application by a Self-Employed applicant and a PAYE applicant is that Self-Employed applicants will need to provide proof income covering a longer period of their working history.

The purpose of the additional proof of income, which will usually need to cover two to three years, is to allow Mortgage Lenders to establish an average income that is a more realistic reflection of your long-term income. As there is ordinarily a degree of fluctuation in income when you’re Self-Employed, this process allows the lender to mitigate some of the risk that those fluctuations create.

What specific documents do you need?

As with all applicants, you should expect to provide proof of address and ID. The documents required as proof of a stable income over the past two to three years will vary, depending on your Self-Employment type:

Limited Company Director

Under most circumstances your personal income and dividend payments will be considered as income, although a small number of lenders will also consider your retained profits alongside them. We can help you to find the lender that has a criteria that most closely matches your circumstances.

Partnership

If you’re a part business owner your share of ownership will need to exceed 25% in order for the income derived to be used in support of your mortgage application.

Where you own 25% or above, lenders use your share of the net profits in the loan calculation.

Documents required for both Limited Company Directors and Partners are:

• Certified and finalised business accounts for the requested duration
• Tax Calculations and Tax Year Overview from HMRC covering the same period
• Business bank statements
• Some lenders also request future business plans or income projections

Sole Traders and Freelance workers

If you are a Sole Trader or Freelancer you will need to provide proof of personal income for the past two to three years. The documents that will be used to determine your loan affordability are:

• Certified accounts
• Tax Calculations and Tax Year Overview from HMRC

Contractors

It can be a bit more difficult to prove a stable income as a contractor and lenders may need extra evidence that you have ongoing offers of work, however, there are specialist lenders that we can refer you to who are more sympathetic to contractors.

Some will treat your income as a Sole Trader and others will use your day-rate, if you have one, where your annual income will be considered to be an annualised version of your day-rate. To evidence your income you will need:

• Two to three years of accounts and Tax Calculations and Tax Year Overview from HMRC for the same period
• Proof of day-rate if applicable
• Future guarantee of ongoing contract