Mortgages For Freelancers

More people than ever are working as freelancers. And yet many feel that buying a house is completely out of reach. Even if you don’t fit the mould of the perfect 9-5 mortgage applicant, you could still become a homeowner. You’ll just need to find the right lender and a broker who'll put the extra work into your application.

In this guide, you’ll find everything you need to get a mortgage as a freelancer. We’ll explain how you’ll be assessed, what you need to prepare, and how to improve your chances of securing the mortgage you need.

Can I get a mortgage as a freelancer?

Yes, it’s possible but it can be more difficult for freelancers to get a mortgage because you have prove your income. Showing the mortgage lender three months payslips – like a regular employee has to do – just isn’t an option. There’s a few more extra steps you’ll need to take.

Luckily, there’s plenty of lenders who’ll consider giving you a mortgage. You just need to meet the right broker. And that’s where we come in. Make an enquiry to speak to an expert and get started.

Who is classified as a freelancer?

A freelancer is someone who’s self-employed and works on a short-term basis for different clients and different projects. Often, people become freelancers because they like the flexibility to choose what they do and how many hours they work. The types of people that freelance often include designers, writers and journalists. 

Freelancers are different from contractors because they’ll work for more than one client at the same time. But like contractors, being self-employed, rather than employed, means they won’t receive any employee benefits.

What do I need to do to apply for a mortgage as a freelancer?

When making a mortgage application as a freelancer, lenders will look at the some of the same criteria as an employee. This includes your income, age and credit score. Lenders may also ask some extra questions to make sure you can afford the monthly repayments:

• What type of freelancer are you?

• How long have you been freelancing for?

• How many clients do you have?

• Have you had any previous contracts renewed, or not?

• How much experience do you have and how much time have you served in your field?

• How long are your current contracts?

 Read more in our Guide: What Mortgage Lenders Look For In Mortgage Applicants.

How will my income be assessed as a freelancer?

As a freelancer, your income will be assessed differently from an employee. You’ll need to share details of your work and credit history, as well as proving how much you earn. That’s because freelancers' work can vary a lot month to month / year to year unlike full-time employed people with fixed salaries. Proving your freelance income can take a little more effort, but it’s definitely worth it!

When making an application you’ll usually be asked to share your certified business accounts or tax calculation from HMRC. These include all of your income and outgoings during the time that you’ve been trading. The more years accounts you have the better (ideally three years or more), but some specialist lenders will only require 12 months.

Lenders will assess your application according to your latest income, and it'll need to appear guaranteed and stable. Lenders have to have confidence you’ll be able to afford your mortgage repayments and will try to avoid offering a mortgage to a freelancer if there's a risk of having a period with no money coming in. Having proof of contracts for future work will boost your chances of being approved.

Along with your accounts, you’ll usually be asked for at least three months of bank statements and your credit report too. This is because lenders want to see how you spend your money and whether you repay loans on time. If you’re a sole trader, you’ll need to get an SA302 tax calculation and tax year overview from HMRC and if you’re a limited company a qualified accountant will need to sign off your accounts.

Exactly what you’ll need will depend on how your freelancing work is structured and the lender’s own criteria. But there's usually quite a few things you’ll need to prepare, so it’s best to get these in order as soon as you can.

Read our helpful guide: How to get Mortgage-ready.

How much can I borrow as a freelancer?

Your income can vary as a freelancer, which makes working out how much you can borrow a little trickier. Most lenders will use an average of the last three years of your net income to work out your affordability. This will also be the case if you’re a sole trader. However if you’re a director of a limited company, lenders may also consider your salary, dividends and sometimes your retained profits too. 

If most of your freelancing work is contract-based then lenders will probably assess the overall value of your contracts. Other lenders may base your affordability on your day-rate.

Lenders will normally carry out an affordability check to work out how much they can lend you. As a freelancer, this is might be three times what your yearly earnings are. But some mortgage lenders will let you borrow up to four or four and a half times your annual income. 

What deposit will I need as a freelancer?

What deposit you’ll need to put down will depend on your unique situation, and varies between mortgage lenders. But the bigger your deposit is, the more of the property you’ll own right away, and the smaller your mortgage will need to be. 

Mortgage lenders have their own criteria to work out how much money they can lend to you. It’s not usually that different for a freelancer than those that are employed full-time. But most lenders will ask for at least 10% deposit for a typical residential mortgage. 

Can I get a mortgage as a freelancer if I have bad credit?

If you’re a freelancer and have bad credit it can be even harder to get a mortgage. This is because you’ll be limited to a fewer number of lenders who’ll consider your case. But it all depends on your individual circumstances.

We always advise trying to improve your credit score to give yourself the best possible chance. However there are specialist lenders who will accept freelancers with bad credit. Your chances of securing the mortgage you need depends on what type of credit issue you’ve had, when it happened, and the amounts involved.

Can I get a joint mortgage as a freelancer?

Being a freelancer shouldn’t stop you from getting a joint mortgage, but knowing what to look out for can help speed up the process.

If you’re freelancing and looking for a joint mortgage, lenders are more likely to approve your application if you’re looking to buy with someone who’s in full-time employment. Ups and downs in your income level will be less important if you’re buying with someone else, but you’ll still need to show stable earnings.

How can I boost my chances of getting a mortgage as a freelancer?   

Getting a mortgage as a freelancer can be more challenging than if you were employed. But it’s still possible. Here’s some tips to increase your chances of being accepted: 

• Be prepared! Do your homework and make sure you understand how your income will be calculated. This will help you work out the amount you can borrow (use our self-employed mortgage calculator) and speed up the application process.

• Mind the gap. One of the perks of freelancing is working when you want, but this can cause issues when applying for a mortgage. Lenders want to see stability in your earnings, so try to avoid big gaps in your income for at least 12 months before applying for a mortgage. 

• Speak to your accountant. If you’re the director of a limited company you’ll need a certified accountant to prepare your accounts. It’s important to chat with your accountant about your plans to get a mortgage.

• Get lots of evidence.  An unstable income is the biggest factor counting against freelancers getting a mortgage, so if you can show you’ve had repeat business or have long-term contracts, your chances of success will greatly improve. Aim to give as much evidence as possible that your business is going strong by providing more documents than the lender specifically requests. 

• Don’t ignore your credit score. There are some simple ways to keep your credit file looking healthy. From correcting errors to registering to vote, it all counts towards building your score back up. Make sure you're keeping on top of your bills and pay them on time.

• Save for a deposit. Putting down a bigger deposit means you’ll be making a bigger commitment and need to borrow less. The bigger your deposit, the better, as it decreases the lender's risk of loaning to you.