Self-employed First Time Buyer

  • Experts in Mortgage Advice
  • Dozens of Mortgage Products available
  • Fee-Free mortgage advice

Get in touch for an initial free, no obligation chat with one of our advisers to see how we could help you.

1 Step 1
How can we help you?
Paige explains the mortgage process for self-employed First Time Buyers.

Can I get a mortgage as someone who is self-employed and a First Time Buyer? Is it more difficult?

It is more difficult but it is definitely possible. The main two income streams in the UK are employed and self-employed. Most banks will take self-employed income, but it’s just assessed a little bit differently. Sometimes it takes a little bit more time in underwriting, but all the high street banks and building societies will accept self-employed individuals who are First Time Buyers.

How does getting a mortgage work for someone who is self-employed and a First Time Buyer?

The bank will look for a track record of your employment. They will want to see your income over the last two years. When it goes to underwriting, after you’ve submitted a full application, they will look at your accounts to check they make sense and are consistent. They might question any unusual figures or the status of your work and how consistent it is. Realistically, as long as you’ve got a reasonable response it should all be fine.

How many years do you have to be self-employed to get a mortgage as a First Time Buyer?

Generally, banks will want you to have been self-employed for at least two years. They want to see your last two years’ track record of employment. It gives them a good understanding of what to expect you to earn in the future. Some lenders will take one year’s accounts, but they are fewer and further between and sometimes we’ll have to go to a specialist bank to do that. But it’s definitely not impossible – even if you are a First Time Buyer they will still potentially look at you with one year’s accounts.

How much can I borrow for a mortgage if I’m a self-employed First Time Buyer?

You don’t get scrutinised for being self-employed. You will be assessed in the same way as somebody who is employed, using the same income multiples. So it differs per situation, but generally speaking you can borrow roughly about four and a half times your income. It could be a little bit less depending on your circumstances.

How is a mortgage calculated for a self-employed First Time Buyer in the UK?

Lenders will take an average of your last two years’ SA302 and apply the income multiples based on those. Sometimes, if you’ve got a lower income for the most recent year, they will take that lowest number. It’s just to show that even in your worst year you can still afford the mortgage.

What documents do I need to apply for a mortgage as someone who is self-employed and a First Time Buyer?

You’ll need your SA302 and tax year overview. You can generally download these from HMRC or request them from your accountant. It will just show what you’ve claimed for that year. A lot of people get that confused with an SA100 document, which is the full tax document. We don’t need that – just the summarised accounts. If you have an accountant, ask them first because they’re going to know exactly what we’re talking about.

Speak To An Expert

Whether you’re buying your first home, expanding your portfolio or looking for insurance to protect your loved ones, our friendly service and expert know-how can help ensure you get the most suitable solutions for you.

What if I have bad credit as a self-employed First Time Buyer?

Having a bad credit score will impact which banks you can go with, but it doesn’t matter that you’re self-employed. They will use the same way to judge your income. Having bad credit can impact which type of lender we go with. Some will scrutinise self-employed income a little bit harder. They just need to know that it’s a solid form of employment. They may want to understand a bit more about the business and the nature of the work, to ensure it’s going to be sustainable going forwards. But it is definitely possible. It just depends on the severity of the credit issues. If you are in a situation with more niche circumstances, speak to a broker. We will point you exactly in the right direction around the rates you can get and the possibility of getting a mortgage.

How do lenders calculate my income as a self-employed First Time Buyer?

It’s similar to what I said before – there’s a general rule of thumb of about four and a half times income, but it varies from lender to lender. It can also be influenced by how much you earn, and a few different other factors. A broker can give you the exact amount. Things vary on such a wide scale and it’s a very individual thing – especially with self-employed income. It’s a good idea to talk to somebody who understands which lenders will prefer your type of self-employed income – it will potentially make a big difference.

How can I improve my chances of getting a mortgage as a self-employed First Time Buyer?

We definitely recommend knowing what your accounts say you have declared as your income. Sometimes people aren’t 100% sure and they are surprised that certain expenses have written off their income – or vice versa. We recommend having your strongest two years’ accounts. So if you know that your accounts are coming round the corner and you had a bad year two years ago, it could potentially be worth waiting. That way we’ve got stronger income to show a bank – it could mean you can borrow more money, if that’s something you’re looking for. Being aware of your income is harder when you are self-employed and going through the income tax system, because it’s complicated. It’s why most people prefer to have an accountant look at it for them.

How do I apply for a mortgage as a self-employed First Time Buyer?

As mortgage brokers we will request all the information and documents relevant for you. Sometimes they vary depending on what type of self-employed income you have, or if you’re part of a limited company. There’s a few different ways it can work. That’s why speaking to a broker makes it a lot quicker – we’re going to know exactly what you need upfront. We’ll find you a lender suited to your needs, and we submit the full application and help with the underwriting process. We will basically be the middleman between you and the bank, with an understanding of what the bank wants to hear and what information they need to progress your case as quickly as possible.

Your home may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.