Self-Employed Mortgage with One Years Accounts

Is it possible to get a Mortgage if you’ve only been Self-Employed for one year?

Using a specialist Mortgage Lender, it’s perfectly attainable for a Self-Employed person with only one years’ worth of accounts available to secure a mortgage. Lenders often require Self-Employed applicants to be able to demonstrate a two to three year history of accounts in their current role, in order that they can calculate an average basic income across that period.

There are a small, but increasing number of specialist lenders now offering mortgages to Self-Employed applicants with only twelve months of accounting history, however, there are likely to be other criteria to fulfill in order that they can satisfactorily mitigate their risk, and interest rates will also be higher in these circumstances.

How do I prove my income with one years’ accounts

As Self-Employed applicants ordinarily need to show a substantial history of stable income, proving your income can be difficult with just the latest year’s accounts available. Many lenders will require that you provide additional proof of a stable and maintainable income. A professionally drawn up business plan and future income projections are usually adequate for this purpose.

Depending on the type of Self-Employed activities you carry out, your mortgage will be calculated slightly differently and therefore the documents required as proof of income can also be different.

Limited Company Director

Your personal salary and dividends payments will be used to determine your loan affordability, as a business owner. There may be some specialist lenders who are willing to look at your net profits alongside the other income, however, this is less common. To prove your income, you will need to provide:

• Your accounts for the first trading year,  certified by a qualified accountant 
• SA302 form for this duration
• Business banking statements may also be required

Sole Trader/Freelancer

If you are a Sole Trader or Freelance worker, your total annual income will be considered by the lender. This can be proved with your SA302, however, any additional proof of guaranteed future income that you can provide, for example, a contract from a client, will strengthen your application. Those in qualified professions may also be able to provide their professional certification for this purpose.

Partnership

If you own at least 25% of the company you are a partner in, this source of income can be used to support your mortgage application. The Mortgage Lender will use your personal share of the net profits as your basic income. If you own less than that, unfortunately this will not be considered. 

Documents required for proof are:

• SA302 for the latest financial year
• Business bank statements