Self-employed lending explained.

Your home may be repossessed if you do not keep up repayments on your mortgage.

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First things first, when are you considered self-employed?

You’re considered self-employed by most banks and lenders if you own more than 20% of the business that is your main source of income. This includes sole traders, including those who subcontract on an individual or multiple basis, partners who are currently in a Partnership or Limited Liabilities Partnership or shareholders in a Limited company owning 20% or more of any shares issued.

Can you get a mortgage if you are self-employed?

Yes – absolutely!

In fact, you’re already in the right place. At Together, we look at a customer’s full circumstances before making a decision. If you can show that you can afford the repayments and that you have at least one year of trading history under your belt, we may be able to help (even if you’re self-employed).

That’s not the case for all lenders though as some will automatically reject applications from self-employed individuals. Other lenders may not be able to handle the complex or multiple income sources that typically come from working for yourself.

Remortgaging when self-employed

Remortgaging when you’re self-employed is pretty much the same as any other remortgage with one important difference; instead of simply providing your most recent payslips, you’ll need to bring a bit more paperwork to show your earnings another way.

This process might also depend on whether or not you were self-employed when you applied for your last mortgage.

Check out our 5 top tips to remortgaging when self-employed for more info.

Can you get a home loan when self-employed?

Yes, you can take out a secured homeowner loan as a self-employed individual.

They can be used for a variety of different reasons including home improvement, debt consolidation and making a big purchase.

For a home loan with Together, you’ll just need to prove that you have at least one year of self-employed trading history and can afford the repayments.

If your application is accepted, you’ll get the same rates as you would if you were an employed applicant.

Self-employed mortgage requirements - eligibility and criteria

Most lenders will typically ask you to provide two to three years of self-employed trading history before reviewing your application.

At Together, we only ask for one year of trading history. We just need you to provide some additional documentation (your latest SA302 form or an accountants certificate, along with your last three months of business bank statements) to prove your income and your affordability. We require each tax calculation to represent two full business years. If the borrower has not been self-employed for two years we will require an accountant’s certificate.

You can find out all the documentation we’ll accept in our Mortgage application checklist.

How is qualifying income calculated?

When it comes to our self-employed income mortgage criteria, we can accept a range of different types of income, but the ones that are relevant to you may depend on your trading style.

The most common income types we accept are:

• Sole traders can use net profit (if using accounts) or total income (if using an SA302 Tax Calculation form).
• Partnerships can use your share of net profit (if using accounts) or your share of total income (if using an SA302 Tax Calculation form).
• Limited company directors can use the director's salary, dividends or (sometimes) retained profits.

What documents do I need to apply for a mortgage or a loan?

There are a number of documents we may ask for in order to prove your income if you’re self- employed, which you can find on our Mortgage application checklist.

We may ask for any of the following to assist your application:

• An accountant’s certificate
• SA302 form
• Tax year overview from HMRC
• Business bank statements

Can self-employed individuals get a mortgage or a loan with bad credit?

Yes. We can review credit profiles without a credit search. We also review applications on a case-by-case basis, meaning we’ll look at the whole picture and not just the numbers.