Content Writer
Mortgage Advisor & Director
Getting a mortgage when you carry out any type of self-employed work means finding a lender that can best accommodate your specific trading style. If you’re self-employed and work for different clients on a temporary basis, you’ll likely be considered a freelancer.
While most lenders accept self-employed applicants, the criteria from one lender to the next are broad and varied. It’s therefore crucial to approach a lender with freelancer-friendly criteria. We look at mortgage lender criteria for freelance applicants, how to improve your chances of securing a suitable mortgage deal, and how a mortgage broker can help you.
Can freelancers get a mortgage?
Getting a mortgage as a freelancer is not as straightforward as it is for someone with a traditional employed job, but it’s absolutely possible. Many well-paid and respected professions favour freelance working patterns, such as journalism, web design and IT consultation.
The majority of lenders will likely treat your application in the same way as a sole trader or contractor, depending on how you’re paid. However, if you’re an agency worker, while you may consider yourself to be self-employed, lenders will likely treat your income as employed income if you are paid via an umbrella company.
Either way, your mortgage application is likely to be more complex than it would be for an employed worker, especially when it comes to proof of income. Depending on their individual criteria, how you get paid, and the type of contracts you use, each lender will treat your income slightly differently. This is why a mortgage broker who specialises in freelancer clients can be particularly helpful if you trade this way.
How to get a mortgage as a freelancer
The most important factor when it comes to getting a mortgage as a freelancer is proving you have a stable income. Here are the criteria most lenders will be looking for you to meet:
-
Proof of income - at least 2-3 years of documents showing full accounts, SA302s, and bank statements to cover this period. Some lenders may accept freelancers in certain industries with only 12 months of accounts, which can be easier for those in a professional career, or with a substantial history of an employed position in the same role
-
Contracts - anything you can provide to show stability, such as current, previous, and future contracts. If you have gaps of 3 months or more between contracts, it can be a problem for some lenders, but others are more flexible so long as you’re able to provide a good explanation
-
Credit history - While it’s possible to get bad credit mortgages, this can sometimes be doubly hard if you’re also self-employed. That said, it’s not impossible, so speak to one of our team if this applies to you
-
Deposit size - You’ll usually need to provide at least a 5% deposit, although some lenders may ask for more from self-employed applicants
Speak to a broker who specialises in freelancer mortgages
How affordability is calculated
Lenders assess income dependent on the type of self-employed income you earn, and how they define freelance income. This means that one lender may look at your income differently from others. This can be a positive thing, however, so long as you opt for the lender who can make the best use of your specific income type.
Most lenders will still offer around 4 to 4.5 times your annual income, but there are three main ways they may assess the freelancer's income that they consider to come up with the annual figure this multiple is based on:
-
Use the average of your earnings over the last 3 years, although some will use the latest year’s income - this can be great if your income has improved, but where your income has gone down, it’s likely best to find a lender who will look at the former
-
Consider your contract or annualise your day rate to calculate your income, where applicable
-
Consider multiple sources of income. This might include a combination of self-employed working styles, or both employed and self-employed income. The more complex your income is, however, the more likely you’ll need a specialist lender
You can use our calculator below to get a rough idea of your maximum borrowing:
Best mortgage lenders for freelancers
Despite self-employed mortgages being a little more complex, with the rise in self-employed workers in the UK, there are now over 50 lenders that will potentially accept freelance income. However, given that each lender has their own criteria for assessing freelancer income, and around 30% of the mortgages available to freelancers are intermediary-only, using a broker gives you the best chance of securing one to suit your specific needs.
The criteria factors that vary from one lender to the next are typically how long you need to have a proven history of operating as a freelancer, and whether they use an average of multiple years' income, or your most recent, as the annual income figure.
-
If you have a 12-month trading history, specialist lenders, such as Stafford Railway Building Society, Kensington or Aldermore may consider you
-
If you have two years of trading history, some banks, such as NatWest, Nationwide or Halifax may consider you
-
If you have 3 years of trading history, there are likely to be more lenders available to you, such as Kent Reliance
Using freelance earnings as a secondary income
If you’re using freelance earnings as a secondary income, then it’s a good idea to find a lender that will consider 100% of your additional income. Most lenders are willing to consider some element of additional income on top of your main income; however, in most cases, they will only look at between 50% and 75% of your second income.
A mortgage broker with experience in self-employed mortgages will be able to point you in the direction of a lender who can use all of your income, especially if it comes from a variety of sources.
Why choose Teito for your freelancer mortgage?
It can be hugely beneficial to use a mortgage broker for freelancer mortgage applications, as there are so many intricacies to the way lenders calculate income, and how they are willing to use it. Some lenders also only accept freelancer applications via a broker, like ourselves, so by speaking to one of our knowledgeable team, you’re broadening the pool of lenders available to you.
Other customers used Teito because:
-
Our brokers specialise in all types of self-employed mortgages, including those for freelancers, and can find the lenders that will make the best use of your income
-
Our service is 5-star rated across multiple review platforms
-
Exclusive deals are often available through us
-
We offer your first consultation completely free of charge
If you’re ready to find the best freelancer mortgage for your circumstances, get in touch.
FAQs
It can be harder than if you have a more traditional income, but there are some things you can do to improve your chances of acceptance:
-
Save a larger deposit
-
Provide evidence of a stable income from the same profession for over 3 years
-
Any additional evidence from clients, such as contracts, agreements, invoices, especially detailing ongoing work
-
Use a guarantor mortgage if you’re unable to meet the affordability criteria alone
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.