How many years of accounts?
Most mainstream lenders want two years of accounts or SA302 tax calculations with matching tax year overviews from HMRC. A growing number accept one year, particularly if you were previously employed in the same line of work. Nobody lends on projections alone.
How lenders read your figures
| How you trade | What lenders usually count as income |
|---|---|
| Sole trader or partnership | Net profit from your tax return, usually the latest year or an average of the last two, whichever is lower |
| Limited company director | Salary plus dividends, or salary plus your share of net profit after corporation tax (some lenders), which can be much higher if you retain profit in the business |
| Contractor on day rate | Day rate × 5 × 46 (or similar) as an annualised salary, with some lenders, if you have a track record of contracts |
The difference between a lender that counts retained profit and one that only counts dividends can be tens of thousands of pounds of borrowing. Applying to the wrong one and being declined then sits on your credit file.
What to have ready
- Two years of SA302s and tax year overviews from your HMRC account.
- Full company accounts, signed by an accountant, if you're a director.
- Three to six months of business and personal bank statements.
- Your accountant's details; some lenders send them a reference form.
- Current contract and previous contracts, for contractors.
Common trip-ups
- Minimising profit for tax. An accountant who keeps your taxable profit low is doing their job, but low declared income means low borrowing. Plan the mortgage year or two in advance.
- A dip year. If the latest year is lower than the one before, most lenders use the lower figure. A broker knows which lenders will consider the reasons behind it.
- Recently incorporated. Going from sole trader to limited company resets the clock with some lenders but not others.
Common questions
Can I get a mortgage with one year of self-employed accounts?
Yes, with some lenders, especially if you were employed in the same trade before. The choice is narrower and the deposit may need to be larger. Two years opens up the whole market.
Do self-employed people pay higher mortgage rates?
No. If you meet a lender's criteria you get the same products as an employed applicant. The difference is in the evidence you provide and how income is assessed.
I'm a director and leave most profit in the company. Can that count?
With some lenders, yes: they assess salary plus net profit rather than salary plus dividends. That can transform what you can borrow. A broker will target those lenders specifically.
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