Self-Employed Mortgage With 2 Years' Accounts

Can I get a mortgage with two years’ accounts?

Yes, it’s possible. But you might find it’s a little more difficult than if you had three years’ worth, which is the typical minimum expectation for self-employed mortgage applicants. The high street banks will probably turn you down, but there are specialist lenders out there who’ll be willing to consider you.

Why is it more difficult?

Mortgage lenders have a responsibility to make sure they’re lending to people who can pay the money back. That means you need to give proof that you can afford your monthly repayments. If you’re self-employed, that means at least three years certified accounts.

But not all mortgage lenders will be quite so rigid with their lending criteria. As long as you can prove your income, there’s plenty of lenders who will give you a mortgage with two years’ accounts. 

Read our guide to find out more about how all of this works: What Mortgage Lenders look for In Applicants.

To find the right lender, you’ll save yourself a lot of time by seeking the help of an experienced mortgage broker - like us! If you get in touch a member of our mortgage team will contact you to discuss your options.

How long do I need to have been self-employed to get a mortgage?

It’s possible to have only been self-employed for a matter of months and get a mortgage, if you have sufficient proof of future income, a large deposit and a strong previous employment record. In most cases, lenders will want to see three years’ worth of accounts from you to prove your income, or at least they’ll ask for your first year’s tax return at least. They do this because they want to work out how much you can afford to borrow, based on a consistent annual income.

Generally, the more accounts you have, the better. If you have two years’ worth of accounts, it’s better to have had them prepared by a qualified accountant. If they can do a year-to-date overview of your income, that’ll help your case further when your mortgage broker approaches lenders.

Does my self-employment status make a difference?

Lenders generally don’t mind how you’re registered, as long as you can prove your income is stable and your business is viable.

The amount you need to earn to afford a mortgage completely depends on things like:

• The price of the property you want to buy

• The size of your deposit

• Whether you have any credit issues

If you’re self-employed and are registered as a sole trader or you’re a freelancer, a lender will analyse your earnings by looking at the net profit of your business over recent years. 

If you’re set up as a limited company, a lender will look at your salary and dividends or share of net profit. If you’re a contractor, then your annualised day rate will be taken into consideration.

What income evidence will a lender want to see when I apply for a mortgage?

Once you’ve found a lender that’ll consider you for a mortgage with two year’s accounts, you’ll usually have to provide two things:

1. Finalised accounts from a qualified accountant to prove your income

2. An SA302 tax calculation and tax year overview*, available online from HMRC

You’ll also need a lot more documentation for your application so it’s best to be prepared. Read more about what you’ll need in our Guide: How to Get Mortgage-Ready.

What’s the most I can borrow on a mortgage if I’ve only been self-employed for two years?

This will depend on your income and your credit history – just like how it’d be if you were full time employed. It’ll also depend on what kind of self-employment you’re in. 

For example, if you’re a sole trader or in a partnership, the amount you can borrow will be based on your share of the net profit from your two year’s accounts. But if you’re a director of a company, the amount you can borrow is usually calculated on the salary you take, or the dividends.

What else will affect my ability to get a mortgage with two year’s worth of accounts?

There are lots of other things lenders will look at when they’re deciding whether to offer you a mortgage. Lenders will look at:

• Your credit report: If you have any bad credit issues on your file, you might need to seek the help of a specialist bad credit mortgage lender, which could mean paying higher interest rates and a larger deposit. 

• Your deposit: the larger deposit you have, the more mortgage lenders will be attracted to your application. 

• The property type: A non-standard construction property or one needed large renovations might need a specialist lender, which limits your options a bit more.