The minimum deposit for a self-employed mortgage is generally the same as for employed applicants, typically starting from 5% of the property’s value. However, having a larger deposit (e.g., 10% or more) can offer access to a wider range of lenders, potentially better interest rates, and more flexibility, especially if you have a shorter trading history or a more complex income structure.

Lenders usually calculate how much you can borrow based on an income multiple, typically 4 to 5.5 times your annual income, similar to employed applicants. The main difference lies in how your income is assessed. For sole traders, it’s usually net profit; for partnerships, your share of the profit; and for limited company directors, it’s often salary plus dividends. Some specialist lenders may also consider retained profits.

Lenders assess affordability for self-employed individuals by meticulously reviewing your business’s financial history to determine your sustainable income. This usually involves analysing your certified accounts and/or SA302 tax calculations (Tax Year Overviews) over the past 2–3 years. They look for consistency and growth, considering net profits, salary, dividends, and sometimes even retained profits, depending on your business structure and their specific criteria.

Self-employed individuals pay the same rates as employed applicants for similar loan-to-value (LTV) and credit profiles. The key to finding the best rates lies in identifying lenders who truly understand and are flexible with self-employed income. Specialist lenders often offer competitive deals by taking a holistic view of your finances. Working with a broker is crucial to access these lenders and ensure your application is presented optimally.

Yes, absolutely. Being self-employed does not prevent you from getting a Buy-to-Let (BTL) mortgage. For BTL mortgages, lenders primarily assess the rental income potential of the property to cover the mortgage payments. While your personal income is still considered in the background by some lenders (for ‘top slicing’ or general affordability), the main focus is on the property’s investment viability. You may typically need a larger deposit, often 25% or more, for BTL properties.

A guarantor mortgage allows someone (typically a family member) to use their income or savings/property as security for your mortgage. This can be particularly helpful for self-employed individuals who might have a smaller deposit, a shorter trading history, or fluctuating income, as it provides the lender with additional reassurance that repayments will be met if you’re unable to. The guarantor is legally liable for payments if you default.

The costs associated with a self-employed mortgage are generally the same as for any other mortgage applicant. These include:

• Arrangement/Product Fees: Charged by the lender for the mortgage product.
• Valuation Fee: For the lender to assess the property’s value.
• Legal Fees: For solicitors to handle the conveyancing process.
• Broker Fees: If you use a mortgage broker (though many, like IMC, offer free advice).
• Stamp Duty Land Tax (SDLT): A government tax on property purchases (if applicable). While not a cost, your self-employed status means ensuring your accounts are professionally prepared may be an ongoing expense.

Yes, it is possible, though it can be more challenging. The impact of bad credit depends on its severity, recency, and the reasons behind it. Some specialist lenders are more understanding of past credit issues, especially if they were minor or occurred a long time ago. Having a larger deposit and a stable self-employed income can also improve your chances. A specialist broker is essential to identify lenders willing to consider your unique circumstances.