Mortgages for self-employed: 3 things you need to know

2 min Read Published: 21 Jun 2022

In this article, we cover 3 key things you need to know if you are self-employed and considering applying for a mortgage or remortgage.

This follows on from episode 265 of The Money to the Masses podcast, where Damien talked to Will Rhind, a mortgage expert at independent mortgage specialist Habito. Damien asked a range of mortgage-related questions that had been supplied by members of the Money to the Masses Facebook community group and our newsletter subscribers.

1) What evidence will I need to apply for a mortgage if I am self-employed?

Most lenders will require a minimum of two years' tax returns.

'Self-employed' refers to all of the following:

  • Sole trader
  • Partnership
  • Limited company

Lenders will typically ask for tax calculations based on your SA302, the certificate which confirms the amount of income you have declared to HMRC. You'll also need to provide your tax-year overview, which is proof of the tax you have paid. While many lenders will insist on at least two years' worth of accounts, some will accept just one year. So if you've only got one year of accounts, don't automatically assume that you can't get a mortgage, your choice will just be limited.

2) What deposit will I need to apply for a mortgage if I am self-employed?

Mortgage requirements are generally the same whether you are employed or self-employed, meaning you can get a mortgage with as little as 5% deposit in some cases. It is worth remembering, however, that the bigger the deposit you have the better, as you'll have more choice and will likely be able to secure a better rate.

If you are a first-time buyer, read "How much deposit do first-time buyers really need?"

3) I am self-employed and am due to remortgage my interest-only mortgage soon - what do I do?

If you are currently on an interest-only mortgage then you could consider simply overpaying, rather than remortgaging now. Most lenders will allow you to overpay, usually by up to 10% of the outstanding balance per year. So rather than switching over to capital and interest repayment now, it might be worth just overpaying as much as you possibly can. This will still achieve the desired effect of reducing the amount you owe but you also retain control and have flexibility in the amount you are overpaying each month.

If your situation changes, you can simply revert back to paying the interest-only portion of the mortgage. Overpaying your interest-only mortgage allows you to delay switching to a capital and interest repayment mortgage now, giving you flexibility and allowing you to remortgage at a time that may suit you better.

To watch all of the mortgage Q&A questions being answered, check out the full video here.

Don't forget to join our Money to the Masses Facebook community group, a friendly community that allows like-minded people to network and chat.

Will Rhind from Habito answers this and many more mortgage-related questions on episode 265 of The Money to the Masses podcast. Click on the media player below to listen.

You can also listen to other episodes and subscribe to the show by searching 'Money to the Masses' on Spotify or by using the following links: