Head of Content
Mortgage Advisor & Director
Mortgages are available to self-employed individuals, but where do you stand if you haven’t been trading this way for very long? Here, we will lay out your options if you’re applying for a mortgage with a year’s accounts or less, and explain how you can get the advice you need to ensure the best outcome.
Can you get a mortgage after being self-employed for one year?
Yes. It is possible to get a self-employed mortgage with just one year’s trading history under your belt, but it can be more difficult since most lenders prefer borrowers with more than this.
The majority of mortgage providers will only offer finance to self-employed people if they have 2-3 years’ accounts to prove their income. If you only have 12 months’ worth, your choice of approachable lenders will be far fewer, which means the best deal is harder to come by.
Most providers who are flexible enough to cater for borrowers with limited accounts are specialist lenders and their rates can be higher, on average. But the good news is that there are mortgage brokers who specialise in this corner of the market. They often have access to exclusive deals for self-employed borrowers and can boost your chances of approval.
Eligibility criteria
You can boost your chances of getting approved for a mortgage with only 12 months’ trading history by finding the right lender and meeting the rest of their eligibility criteria:
Most mortgage lenders have the following requirements for self-employed applicants:
- Stable income: If you made a loss during your first year of trading, your choice of approachable mortgage lenders will be even fewer. Most lenders will expect a good explanation for any losses and a satisfactory income projection for the next year
- Deposit amount: Some lenders cap the loan-to-value ratio for borrowers with one year’s accounts, meaning you will need at least 15% deposit or more for the deals that are available to you. This is slightly higher than the standard 5-10% deposit requirement
- Track record: Although not essential, it can help your cause if you have a track record in your current industry, prior to the one year you have been trading in a self-employed capacity. For instance, you may have worked full-time in the same sector
- Credit history: Having clean credit can counterbalance the risk posed by your limited trading history, but keep in mind that bad credit mortgages are available under the right circumstances, and being self-employed doesn't exclude you from qualifying for one
- Age: It can be more difficult to get approved for a self-employed mortgage if you will be aged 75-85 during the term, but there are specialist lenders for older borrowers
How to get a self-employed mortgage with one year’s accounts
We recommend following the steps below if you are applying for a self-employed mortgage with less than two years’ worth of account to prove your income:
Prepare your proof of income: You will need to present paperwork to evidence your income for the year, either SA302 forms or a tax year overview from HMRC. You should also make sure you have an income projection for the next year prepared.
Optimise your credit reports: Optimised credit files can make a difference if you are applying for a mortgage with limited income proof. You can download your files by signing up for a free trial on Checkmyfile. Check them for errors and outdated information so you can tell the credit reference agencies to correct these things.
Compare rates and speak to a broker: You can compare mortgage deals for free on Teito. After you have chosen one that fits your needs, you can speak to one of our mortgage brokers who specialises in helping self-employed people with limited trading history. They will offer bespoke advice and make sure you are getting the best rate available from the ideal lender for your circumstances - get started below:
Compare self-employed mortgage rates for FREE
Which mortgage lenders are available?
At the time of writing (July 2024), there are approximately 24 lenders available for self-employed mortgage applicants with one year’s accounts. Many of these are specialist lenders, but some mainstream mortgage providers will consider your application too.
The table below shows examples of the kind of lenders who will consider mortgages under these circumstances and some of the specific criteria they use:
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Mortgage Lender |
Criteria for Borrowers With 1 Year’s Accounts |
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*Must have no history of bad credit in the last three months *Has a track record in the trade, or… *Can demonstrate guaranteed income within the next accounting period, or… *The business is an ongoing concern and sustainable, or… *Can provide management accounts for at least the first six months of the current financial year |
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*Will consider lending to applicants with one year’s accounts, but will cap the loan-to-value (LTV) ratio at 80% |
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*Will take the applicant’s accounting information from the last year and average it over a two-year period for the affordability assessment *For new business entities, the mortgage offer will be based on one year’s finalised financial accounts or HMRC documentation (Tax Calculation/SA302 and corresponding Tax Year Overview), and the latest three months’ worth of business bank statements |
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*Generally prefer borrowers to have at least two years’ accounts but can make exceptions when only one is available *Additional information may be requested to support the application |
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*Can consider applicants who have been trading for one year for one of their specialist mortgage products *Caps the LTV at 80% *Accounts covering the full 12 months are required as proof of income |
The above is merely a small sample of the lenders available for example purposes. You can compare rates from these mortgage providers and more for free on Teito - get started here.
Can you get a mortgage with less than one year’s accounts?
It generally isn’t possible to get a mortgage if you have been self-employed for under a year or have less than 12 months’ accounts to prove your income. You might, however, have some options to fall back on, as there are lenders who will consider getting started with your application when you have as little as nine months’ trading history under your belt.
The idea is for you to complete your mortgage application after you have passed the 12-month milestone, but there is no reason to delay speaking to a broker sooner than this.
Why use Teito for your mortgage needs?
You can source your own mortgage deal and access support from a broker who specialises in securing mortgages for self-employed people with limited accounts for free on Teito.
Here are just some of the reasons our customers choose us:
- Exclusive rates and deals are available
- Our brokers can offer bespoke self-employed mortgage advice
- We are five-star rated on leading review websites
- You can secure an agreement in principle in minutes
Ready to get started comparing rates and take advantage of a free, no-obligation chat with a broker who specialises in self-employed mortgages? Get started here.
FAQs
The main benefit of waiting until you have been trading for at least two years before you apply for your mortgage is that you will have a wider range of lenders to choose from. There are approximately 24 lenders available for self-employed borrowers with 1 year’s trading history, but the number increases to around 68 after you pass that two-year mark.
Having access to a wider pool of lenders means you have a better chance of landing a favourable deal, but keep in mind that mortgage brokers often have access to exclusive deals for borrowers with just one year’s accounts, which could be just as good as what is on offer for self-employed applicants with more extensive trading history.
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.