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 and a broker who'll put the extra work into your application.
Mortgage lenders tend to prefer people in full-time employment because their income is super easy to understand. That’s because they usually make the same amount each month. As freelancers, we know you often earn even MORE money than those on a salary, so you should be more attractive to mortgage lenders...right? Sadly not - most of the high street banks just aren’t set up to deal with complex incomes, which can make getting a mortgage a little more tricky. Rest assured, with the right expert and a specialist lender it can usually be done.
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, how to improve your chances and more.
Yes, you can! But you’ll have to work a bit harder on your application compared to those in full-time employment.
It can be more difficult for freelancers to get a mortgage because you have to PROVE your income. Showing the mortgage lender three months of payslips – like a regular employee has to do – just won’t cut it. There’s a few more extra steps you’ll need to take.
It’s important to know that freelancers are often considered riskier by the mainstream lenders (high-street banks). Usually, they won’t take the time to understand how you make your money. They may even tell you it can’t be done - and that's just not true. Most lenders prefer ‘vanilla people’; those in regular jobs, with regular incomes that are paid...regularly. Fortunately we know lots of lenders who don’t feel this way.
There’s lots of lenders who’ll give 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 find your freelance mortgage options.
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. Good thing they can charge the business higher fees to make up for it. Cha-Ching!
Whether you’re a freelancer, a contractor or an employee looking to get on the property ladder we can help. Make an enquiry to speak to one of our Mortgage Experts - they'll know what to do.
When making a mortgage application as a freelancer, lenders will look at 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.
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 detailed business accounts or tax returns. 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. See our self-employment guide for more information including what to do if you’ve been trading for 12 months or less.
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 a SA302 tax return from the 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.
Make an enquiry to find out your options for getting a mortgage 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 usually three times what your yearly earnings are. But some mortgage lenders will let you borrow up to five or even six times your earnings.
Lenders will also look at other affordability criteria such as your deposit, any existing financial commitments (including debt repayments and fixed outgoings) and your credit history. Don’t worry - they look at this criteria with employed applicants too.
To find a freelancer-friendly lender and get advice on how much you’ll be able to borrow, make an enquiry to speak to one of our Mortgage Experts.
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.
The amount you can borrow will depend on your loan to value as well as your earnings track record and how long you’re happy to commit to a fixed-interest rate for. You can usually borrow more if you commit to a longer fixed interest rate because it gives the lender confidence you can repay an ongoing set amount.
Read more in our Guide: Mortgage Deposits and Income Multiples Explained.
It can be more difficult to get a Buy to Let as a freelancer, but it’s not impossible.
Many lenders require a minimum amount of income which is anywhere from £15,000 to over £25,000. These numbers can be harder to prove for freelancers on variable incomes.
Fortunately, there are some specialist lenders who are happy to consider freelancers no matter how much you earn. But you’d need to own your main home and the rental income from the Buy to Let property would need to cover at least the cost of the mortgage repayments.
If you don’t already own a property then lenders may be concerned you’ll be trying to get a Buy to Let as a property to live in so you’re unlikely to be approved.
We don't offer Buy to Let mortgages at Haysto, but you can read more about how they work in our Guide.
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. The type of mortgage you'll be able to get depends on things like how much money you want to borrow, when the credit issues happened, and why.
Luckily, our Mortgage Experts are pretty experienced at the tricky stuff. Make an enquiry to find out your options.
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. If you can't do this, you might be better off getting a guarantor mortgage.
Guarantor mortgages involve asking a family member to provide a guarantee on your mortgage made against their own home. Your chances of being accepted for a mortgage will improve and you may be able to borrow more than you would on your own. You may even qualify for lower interest rates. Read more about how guarantor mortgages work.
Whether you’re looking for a guarantor mortgage, a joint mortgage or going it alone, we can help. Make an enquiry to find out your options.
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:
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.
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.
Say YES to long-term and repeat business
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. Your Mortgage Expert can help you do this.
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. Read more tips in our Guide: How to Improve Your Credit Score Before Applying For a Mortgage
Big up your 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. You could also purchase a cheaper property, so that you’re buying at a lower loan to value.
When applying for a mortgage as a freelancer it's best to speak to an expert who can assess your unique situation and explain your options. Specialist mortgage brokers (like our Mortgage Experts) know the market, which lenders are right for you, and how to give your application the best chance of being accepted. Make an enquiry to get started
Our Mortgage Experts are fully-qualified with experience in bad credit, self-employed and complex mortgages. They have a proven track record of getting mortgages for people who’ve been rejected elsewhere.
Our calculators give you an idea of what you might be able to borrow, what's affordable and a rough estimate of the kind of property prices you can start to look at.