Self-Employed Mortgage First Time Buyer
- We help our clients navigate the landscape of mortgages, pensions, protection and investment planning
- At Rockstone we’re in it for the long haul, so think of us as your partners in financial planning.
- We take time to listen and assess, before hand-picking the most suitable mortgage product or future investment plan to suit your needs
Get in touch for a no-obligation chat about how we might be able to help you.
What's On This Page
Self-Employed Mortgage First Time Buyer
Stacey Gulliver explains how the mortgage process works if you are a self-employed First Time Buyer.
How does getting a mortgage as someone who is self-employed and a First Time Buyer work? Is it difficult?
It’s not difficult, really. It’s very similar to being employed, as long as you’ve got the evidence. There’s no issue with being a First Time Buyer who is self-employed.
If you’ve been self-employed for two years or more, that’s great. It’s when you’ve only just recently become self-employed that you’re not going to get a mortgage. You need to have at least a year’s evidence of your income.
It also varies depending how you are self-employed, whether you’re a limited company or whether you are a sole trader. We’ll talk about this further on in the podcast, but there are different ways to make affordability stretch, depending on how you are set up.
How many years do you have to be self-employed to get a mortgage as a First Time Buyer?
Ideally, a minimum of two years. However, if you’ve got one year’s accounts and they are particularly good, we can go ahead with some lenders. It won’t necessarily be a high street lender, but it’s something we can look into.
How much can I borrow for a mortgage if I’m a self-employed First Time Buyer?
Things are changing, but it did tend to be a bit more difficult for the self-employed. If you’re employed, some lenders do a First Time Buyer incentive. That hasn’t moved over to the self-employed yet, but I’m hoping that will change.
At the moment, you’re normally looking at being able to borrow 4.5 times your income. We take that income as your net profits from your SA302s – which are also called tax computations or tax calculations.
If you are set up as a limited company, we could use profit and salary, which sometimes is a little more beneficial.
How is a mortgage calculated for a self-employed First Time Buyer in the UK?
It’s calculated using your income. If you have a partner who’s employed, we can add their income in as well. It’s not necessarily just based on your income. With two people on the application, we can use two lots of income.
Speak To an Expert
What documents do I need to apply for a self-employed First Time Buyer mortgage? How do I prove my income?
If you’re a sole trader, you would need what I call SA302s, but your accountant might call them tax computations or tax calculations. There’s also the supporting tax year overview, and we would need two years’ history of those.
Most lenders will only use up to 18 months, so ideally you should have fresh ones done in April rather than waiting until the January deadline. They will probably be out of date by then, so it’s always best to get them done as soon as possible.
If you’re a limited company, I would need the same documents plus two years’ accounts – your accountants will do that for you. Sometimes I might need three months’ business bank statements, if you have a separate account.
What if I have bad credit as a self-employed First Time Buyer?
Unfortunately, whether you’re employed or self-employed, bad credit has a knock-on effect for a mortgage. I always advise people to keep a check on their credit file.
We need to make sure it looks as good as possible. With First Time Buyers especially, we might chat through what they can do to improve their credit score. If you’re living at home, you could have a very soft footprint. The credit file isn’t actually bad, it’s just minimal because you’re not paying utility bills or a mortgage.
Lenders look at the credit file to see that you can pay your monthly commitments easily. But First Time Buyers may just have a smaller credit footprint. It might just take three to six months and you’ll be ready to get a mortgage. With bad credit, it might need a bit longer.
How do lenders calculate my income as a self-employed First Time Buyer?
Most lenders will take salary and dividends if you are a limited company. But some will take your salary and net profits, which could make quite a big difference to affordability, especially if you have a nice amount of retained profits in the company.
Some lenders ask for an accountant’s certificate – where potentially your accountant can state that the current year is better than the previous year, for example. That is always promising – it’s down to your accountant to add notes in.
For a sole trader, we would use the net profits on the SA302s as your income. Most lenders take an average of the last two years, so if profits are quite stable that works out quite easily. If you’ve had a lower profit in 2024 and a higher amount for 2025, it would again be an average of those last two years.
But if you have a lower figure for 2025 we would have to use that figure rather than an average. That’s quite important, and why it’s handy to come to a broker. We can look at the different scenarios to get you the best deal.
How can I improve my chances of getting a mortgage as someone who is self-employed and a First Time Buyer?
Ideally, you’ll be self-employed with a minimum of two years’ income. Keep saving for your deposit. Some people only have a 5% deposit, but if you can bump that up to 10%, that can make a big difference.
Keep an eye on that credit file and make sure you pay all your commitments on time. Then there won’t be any anomalies for an underwriter to be concerned about.
How do I apply for a mortgage as someone who is self-employed and a First Time Buyer? How can a mortgage broker help?
Come and see me. I’ll guide you through the whole process and make it as easy as possible. Sometimes it can be a slow burn approach. We would have a fact-find meeting to see if there are any areas we can nurture and then move forward in a few months’ time.
For other people, all the ducks are in a row and everything is ready. Then you can simply go house hunting, find your dream property and we’ll get that mortgage in for you.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
