Mortgages for Self Employed

Getting a mortgage can be particularly challenging for self-employed individuals. 

As a self-employed professional, freelancer, entrepreneur, or small business owner, you enjoy the freedom and flexibility of working for yourself. However, when it comes to securing a mortgage for your home, proving your income and demonstrating financial stability can present unique hurdles.

At Mortgages Direct we specialize in helping self-employed individuals like you overcome these challenges and access the mortgage solutions you need. Whether you're a sole trader, partner in a partnership, director of a limited company, or operate under another form of self-employment, we understand the complexities of self-employed income and can guide you through the mortgage process.

We recognizes that mortgage lenders may have stringent criteria for assessing self-employed income, which can make it difficult to qualify for a mortgage. 

We're here to simplify the process and provide solutions that accommodate your unique financial circumstances and homeownership goals. 

We will consider some of the main Self Employment categories below.

More information is available at

• Mortgages for Sole Traders

• Mortgages for Directors of Limited Companies

• Mortgages for Partners in a LLP

• Mortgages for IT Contractors

Fed up reading! just fill in our Mortgage Enquiry form and we will take it from here

Mortgages for Sole Traders and Partnerships

Sole Traders will need to register with the Inland Revenue if their annual income exceeds £1,000. 

You must register by 5th October AFTER the end of the tax year in question. So a business beginning trading in July 2023 should register their business by 5th October 2024

If there are two or more Partners then all Partners will need to register

What is your start date?

If you are starting a new business you will need to think about what is your start date

The Inland Revenue tax year runs from 6th April to 5th April the following year. For most businesses it will make sense to replicate these dates. 

You should consider that Mortgage lenders will require FULL years accounts and you will need AT LEAST one full years accounts to have some availability of mortgages

Typically mortgage lenders require 2 or 3 years' of accounts for a self employed applicant or 2 or 3 Tax Statements of income (SA302) from the Inland Revenue

 For a sole trader or partnership, it is the net profit figure from the profit and loss account that is used in the income calculation. The net profit figure is arrived at by deducting the business expenses from the total income or revenue. If the business is a partnership then the profits are shared in proportion with the percentage ownership

Most lenders will average the net profits over the last 2 or 3 years. Some lenders will use the most recent years' net profits

 Lenders may raise a query or decline a mortgage application if the profits have fallen sharply.

For a sole trader, it is the net profit figure from the profit and loss account that is used. 

As a guide, Mortgage lenders may lend up to 4.5x's the net profit figure. For a joint mortgage application it may be up to 4.5 x's the joint income.

But this is just an indication, some lenders may lend more in certain circumstances. Some lenders will have a lower limit. You should contact us if you are hoping to maximise your borrowing

For more information, please visit Mortgages for Sole Traders 

We can help with your enquiry. Please fill in our Mortgage Enquiry form.

We do NOT charge any Broker fees (if your mortgage is at least £100k) 

Mortgages for Partners in a LLP

Limited liability Partnerships provide the Partners with some legal protection against business liabilities or debts

This type of arrangement is quite common for certain professions in the UK - particularly legal, medical, accounting and business consultants.

Upon joining a LLP you may be appointed in one of the following roles:

• Equity Partners: These partners typically have ownership stakes in the LLP and are entitled to a share of the profits. They may also participate in the management and decision-making processes of the LLP.

• Salaried Partners: Salaried partners receive a fixed salary for their contributions to the LLP and may not have ownership stakes or voting rights. However, they may still be entitled to certain benefits and profit shares as outlined in the partnership agreement.

• Junior or Associate Partners: These partners may be in the process of transitioning to higher ranks within the LLP and may have limited profit-sharing rights compared to more senior partners.

Managing partners or the LLP's management committee often play a crucial role in determining profit-sharing arrangements and overall LLP governance. They may review performance metrics, financial reports, and partner contributions to allocate profits fairly among partners. 

The allocation of profit shares among partners can vary depending on the LLP's structure and partnership agreement. In some cases, new partners may be offered a predetermined percentage share of the profits upon joining the LLP. Alternatively, profit-sharing arrangements may be decided by the managing partners or based on a formula outlined in the partnership agreement. 

For more information, please visit  Mortgages for Partners in a LLP

Whether you are classed as employed or self employed, we can help with your mortgage enquiry. Please fill in our Mortgage Enquiry form.

We do NOT charge any Broker fees (if your mortgage is at least £100k) 

Mortgages for Contractors

Contracting has become an increasingly popular employment choice in the UK, offering flexible, diverse opportunities across various industries. 

As a contractor, understanding the different employment arrangements available to you can be key to maximizing your earning potential. Let's explore the various ways contractors can be employed and the advantages of each:

Employed: A popular option is employment under temporary contracts. Typically 6 or 12 months in duration, these contracts are popular with Employers as they may be interested in a particular project and do not want to commit beyond a limited timeframe. Such contracts encourage entrepreneurship.

Umbrella Employment: Many contractors opt to work through Umbrella companies, which act as intermediaries between contractors and their end clients or agencies. Under an umbrella arrangement, contractors become employees of the umbrella company and are paid through PAYE (Pay As You Earn). This means taxes and National Insurance contributions are deducted at source, providing contractors with a compliant payroll solution. Additionally, umbrella companies often provide benefits such as holiday pay, sick pay, and access to employee benefits.

Limited Company: Operating as a director of your own limited company is another common choice for contractors. Setting up a limited company allows contractors to benefit from tax efficiencies and greater control over their finances. As directors of their own companies, contractors can take advantage of tax planning strategies such as salary and dividend payments, which can result in lower overall tax liabilities compared to traditional employment. Limited companies also offer limited liability protection, shielding contractors' personal assets from business liabilities.

Self-Employment: Some contractors choose to work as sole traders or self-employed individuals. While this option offers simplicity and minimal administrative burden, self-employed contractors are personally liable for any business debts and may miss out on certain tax advantages available to limited company directors.

Regardless of the employment arrangement chosen, contractors often face unique challenges when it comes to securing mortgage financing. Mortgage lenders will have strict criteria for assessing contractor income, which can make it challenging to qualify for a mortgage.

At Mortgages Direct, we specialize in helping contractors navigate the mortgage landscape and secure financing tailored to their needs. Whether you're employed through an umbrella company, operate as a director of a limited company, or work as a self-employed contractor, we understand the complexities of contractor income and can help you find the right mortgage solution.

for more information please visit Mortgages for IT Contractors

Whatever your employment situation, we can help with your mortgage enquiry. Please fill in our Mortgage Enquiry form.

We do NOT charge any Broker fees (if your mortgage is at least £100k)