Self-Employed Mortgages and Remortgages: What You Need to Know

Friday 24 January, 2025

At Lonsdale, we understand that navigating the mortgage market as a self-employed individual can feel daunting. With tailored options for both new mortgages and remortgages, this guide outlines the information, practical steps, and the importance of seeking professional advice to help achieve your homeownership goals.

Understanding Self-Employed Mortgages

A self-employed mortgage refers to a standard mortgage available to individuals who are sole traders, contractors, freelancers, or business owners. Contrary to popular belief, lenders do not offer specialised "self-employed mortgages". Instead, applicants must meet standard affordability checks, demonstrating stable income and the ability to repay the loan.

For self-employed individuals, proving income is the primary challenge. Lenders often request specific documentation to verify income stability, such as:

Tax calculations and official forms from HMRC, covering the last two or three tax years.
Business accounts, prepared and signed by a chartered accountant.
Evidence of retained profits or dividends, if applicable.
Each lender may have unique criteria, so working with a broker can help identify suitable options based on your financial situation.

Remortgaging as a Self-Employed Individual

Remortgaging involves replacing your current mortgage with a new one, either with your existing lender or a new provider. Self-employed individuals often remortgage to secure a better rate, release equity, or consolidate debts*. However, the process requires careful preparation.

When remortgaging, lenders will reassess your financial circumstances, so having up-to-date financial records is essential. It's worth starting the process early, particularly if your income varies seasonally or has been affected by external factors such as economic downturns.

Common Challenges for Self-Employed Borrowers

Self-employed applicants may face additional scrutiny compared to those on PAYE income. Lenders often prefer a stable and predictable income stream, which can make irregular earnings or shorter trading histories a concern.

This does not mean obtaining a mortgage is impossible, but it does highlight the importance of thorough preparation and professional guidance.

Professional mortgage advice can help

The self-employed mortgage market can be complex, but professional mortgage advice helps you understand your options and make informed decisions. Lonsdale Mortgages qualified mortgage brokers can:

Match you with suitable lenders based on your financial profile and trading history.
Explain documentation requirements, helping you provide the necessary evidence efficiently.
Negotiate competitive terms tailored to your needs.
Save time and effort, offering clarity in a process that can otherwise be overwhelming.

Seeking guidance from a regulated mortgage broker is particularly important, as they are obligated to act in your best interests. Their impartial advice can help you navigate the intricacies of income verification, loan terms, and interest rates while ensuring compliance with regulatory standards.

Key Considerations for Self-Employed Mortgages

When applying for a mortgage or remortgage, preparation is an important element. Start by reviewing your credit history and resolving any inaccuracies. Ensure your financial documents are accurate, up-to-date, and professionally prepared. Lenders often value clarity and consistency, so showing a reliable track record helps to support your chances of approval.

It’s also wise to factor in potential changes to interest rates or income fluctuations. Fixed-rate mortgages offer stability, while variable rates may provide flexibility. A mortgage broker can help you weigh these options in light of your financial goals.

The Importance of Early Planning

For self-employed individuals, early planning is worth the effort. By consulting a mortgage broker well in advance, you can identify potential hurdles and address them proactively. Whether you're applying for your first mortgage, remortgaging, or planning a property purchase, a tailored approach can make all the difference.

Lonsdale Supports Your Mortgage Journey

At Lonsdale, we are experienced in helping self-employed individuals navigate the mortgage market with confidence. Our advisers combine expertise with a personalised approach, ensuring your experience is seamless and stress-free. With access to a wide network of lenders, we’re here to match you with the right product for your unique circumstances.

Amy Kadir, Mortgage Adviser in St Albans said:

“Take the first step today by contacting us for a mortgage consultation. Whether you're looking to secure your dream home or optimise your current mortgage, our team is ready to guide you through every stage of the process.”

Please note: *Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up the mortgage repayments.