Buying a house when you're self-employed: mortgage, survey and timing

Being self-employed does not stop you buying a home, but lenders look harder at your income and the process can take a little longer. The fix is preparation: get your documents ready, use a broker who knows which lenders suit your income, and book your survey early so a slower mortgage does not leave you short of time.

Key points

• Most lenders want two years of accounts or SA302s; some specialist lenders accept one.
• Contractors, company directors and sole traders are assessed differently.
• A broker who works with self-employed buyers can match you to the right lender first time.
• Book your survey as soon as your offer is accepted, not after the mortgage offer.

What lenders want to see

• Sole traders: usually two years of SA302 tax calculations and tax year overviews from HMRC.
• Limited company directors: salary and dividends, and some lenders will also consider retained profit. This can make a big difference to how much you can borrow.
• Contractors: some lenders work out income from your day rate and contract, which can suit people who have recently gone freelance.
• Bank statements showing your income and outgoings, plus proof of deposit.

Rules vary widely between lenders, which is why going straight to your own bank can mean a lower figure or a decline.

Use a broker who knows self-employed cases

A specialist broker knows which lenders treat your type of income favourably and how to present your accounts. Option Finance in Derby helps self-employed buyers, company directors and contractors every week, alongside harder cases like adverse credit. Their first consultation is free.

Get your survey timing right

Self-employed applications can take a bit longer to underwrite. Do not let that push your survey to the end of the process. If the survey finds a problem late on, you lose your chance to renegotiate before exchange.

1. Offer accepted.
2. Instruct your conveyancer and submit your mortgage application.
3. Book your survey the same week. A Level 2 Home Survey suits most conventional homes; choose a Level 3 for older or altered properties.
4. Use the findings to renegotiate if needed while your mortgage completes underwriting.

Self-employed? Watch your cash flow on completion

If the lender's valuation comes in low or the lender imposes a retention, you may need extra cash on completion day. Self-employed buyers often have savings tied up in the business, so plan a buffer and talk to your broker and accountant early. See also what to do about a down valuation.

Your home may be repossessed if you do not keep up repayments on your mortgage. This guide is general information, not mortgage or tax advice.

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