Many mortgage lenders, when considering an application from someone who is self-employed or running their own business, will ask you to provide three years of accounts, often certified by an accountant. However, we know that this is not possible for everybody, with more people than ever becoming freelance, contractors or setting up their own limited companies. While it might not be an easy proposition, we have found that in certain circumstances it may be possible to get a mortgage with only one year’s trading figures.

Much will depend on the lender that you speak to, as approaches and attitudes can vary greatly from one to the next. In general, if they are open to the idea, a lender will ask for much more information than simply the accounts or your tax calculations. They may also ask for projections, assets and information about your employment before you started your own business. As a rule of thumb, you will need to have been working in a similar trade or profession prior to being self-employed and your previous income and employment history will play a part in the underwriting process.

If the application is to be successful, both you and the lender will need to consider the loan-to-value ratio of the mortgage against the property. As ever, providing a larger than average deposit or level of equity to invest in the property, and therefore requiring a smaller loan, will give you more leverage when it comes to the deal and help the lender to feel more comfortable with the risk of lending to you. Showing your commitment to the mortgage in this way might also mean you are able to get a better interest rate.

Lenders will usually use either your accounts or your self-assessment SA302 year-end tax calculation as evidence of your income, and if using your accounts most will require them to have been prepared by a certified or chartered accountant.

How Much Can I Borrow with 1 Year’s Accounts?

As a general guide, whether you are employed or self-employed, you can normally borrow a maximum of the equivalent of 5 times your proven annual income – although some lenders may consider less, such as the equivalent of 4 or 4.5. With one year’s accounts, you might typically be required to have a deposit of at least 10% available (or equivalent equity, if remortgaging) and the lender will typically look for a good credit history.

Can I Get a Mortgage with 1 Year’s Accounts if I Have Bad Credit?

It depends what the issue is. A lender would normally expect a borrower to have no mortgage arrears or county court judgments (CCJs) against them for a period of two years prior to the date of application. However, if your record shows limited missed and/or late payments in the previous year against credit card bills or store cards (for example), then they may still consider your application.

Under certain circumstances – for example, if you have an especially high income – and providing ability to repay can be shown, it’s possible the amount you can borrow may be increased.

Alternatively, supposing you are well into your second year of trading and are having a better year, you may be able to boost your borrowing based on your accounts for the current tax year, even if they haven’t yet been declared to HMRC – this will depend upon the underwriting policies of the individual lender.

For example, if your income in your finalised accounts for the previous year’s trading was £30,000, but you’ve already hit that figure nine months into the current year, then a lender may be prepared to accept projected figures provided by a qualified accountant when deciding how much to lend – that could make a difference between being able to borrow the equivalent of 5 x £30,000 (£150,000) and 5 x £40,000 (£200,000).

Just as it is with obtaining a normal mortgage, it can also be possible for a self-employed person to remortgage using just one year’s accounts. The process will be very similar to obtaining a remortgage if you were employed, although there may be a stronger case for sticking with your current lender, as they will already know that you are keeping up with mortgage repayments and have a decent idea of your history as a borrower.

However, if your current lender is a high street or mainstream mortgage provider, then you could hit a stumbling block if you no longer meet their criteria for lending, and you may find your remortgage enquiry declined. In some cases, they might also ask more probing questions about your income. Another factor to consider will be why you are remortgaging and what you are planning to use the money for. If you are simply looking for a better interest rate, then things will be smoother; if you are consolidating debts or taking equity out of your property, then the application may become more complex.

If you are sure you want a remortgage and get turned down by your current provider, you will be obliged to shop around and find an alternative lender who is willing to offer you a remortgage as a self-employed person with only one year’s accounts. The good news is that a number of lenders have become continually more flexible in their approach and have moved away from the traditional view that self-employed borrowers should have at least two or three years’ worth of accounts in place before they can be deemed a reasonable risk for a mortgage. To access these lenders, you’ll need to go through a trusted intermediary, such as one of our team at IMC Mortgage Brokers.

We often get self-employed people coming to us who have been declined by one or more of the mainstream lenders for not having sufficient history of trading, looking for a mortgage under the government’s Help to Buy: Equity Loan scheme. As with other types of mortgages, it is possible for self-employed people to obtain a Help to Buy mortgage, even with just one year’s accounts, in the right circumstances.

Help to Buy exists to help people to get their first foot on the home ownership ladder by extending a loan to cover part of the mortgage on a new-build home interest-free for the first 5 years. Often this will change your loan-to-value on the mortgage to 75%, making you a much better prospect for lenders and giving you a healthy cushion in your lending when you most need it. You’ll have more time to develop your business and income to meet the slightly higher payments at a later date.

The mortgage market has evolved to meet changing customer demands in recent years, and although still regulated to ensure responsible lending – meaning lenders must request a lot of personal financial information from the self-employed – many lenders are more flexible than they were previously and will take your wider circumstances into account when considering whether they will lend to you and how much. Our expert team at IMC Mortgage Brokers has in-depth knowledge of the market and access to the specialist lenders who are willing to lend to self-employed people looking to buy under the Help to Buy scheme.

Although there are some high street lenders who will consider lending to self-employed people with only one year’s accounts but, other lenders, their criteria can be quite narrow. To fulfil your aims as a property owner, you might need to consider applying to one of the niche-market specialist lenders on the market to obtain the mortgage that you need.

These lenders have geared their assessments and criteria around borrowers whose needs are not met by the high street banks, and who typically might not be huge financial risks, but whose position needs to be viewed in a different way. Thus, allowing for alternative ways of earning a living or verifying income. Some examples of those who have been operating for a number of years and who are willing to consider self-employed applicants with only one year’s accounts being Aldermore, Bluestone Mortgages, Precise Mortgages, Pepper Money and Kensington Mortgages.

Not all mortgage brokers have access to these specialist lenders. However, at IMC Mortgage Brokers we work with all these and more in our efforts to find the right mortgage for self-employed people who only have one year’s trading accounts under their belt. These lenders understand the nuances of income, allow for your previous experience in your trade and recognise that not all income can be measured by the salary you pay yourself. Due to our expertise and relationships, we can not only obtain exclusive products only available through these lenders, but also have trusted access to any new specialist lenders entering the market.

If you have been declined by high street lenders, get in touch via our online contact form to book a free, no-obligation consultation and find out what all your options are going forward.

If you are self-employed and have only been trading for a year, then you won’t have more than one year’s accounts and may have difficulty securing a mortgage with the majority of lenders on the market. You’ll need to work with one of the many specialist lending companies catering to the needs of niche-market applicants, but the problem here is that these lenders do not advertise their products publicly and will only deal with applications made via brokers or advisers.

The specialist advice offered by those such as our team at IMC Mortgage Brokers will give you the best possible chance of securing the mortgage you need. A deep knowledge of the network of specialist lenders across the UK, especially those who cater to self-employed applicants with only one year’s accounts to show. This will mean you get unbiased, reliable recommendations on which lenders will be the best fit for your needs and circumstances – as well as guidance on how to make your application as strong as it can be. We’ll often spot problems or mistakes that you will not have realised exist.

We have access to over 12,000 mortgage products from more than 90 lenders, many with rates you won’t find on the high street, often on an exclusive basis. Thanks to your strong relationships with lenders, we are able to make informal enquiries before we get to the application process, in order to determine what your chances of getting a mortgage on certain terms will be; ensuring that we don’t waste any of your time (nor harm your credit score) with a failed application. Also sometimes being able to negotiate a bespoke deal depending on supporting factors in your favour when it comes to your projections, future business, previous experience, and more.

To learn more about how we can help you obtain the mortgage you need, don’t hesitate to get in touch with our team on 0800 114 3753, or use our online contact form.