Freelancer Mortgages Explained

3 min
Important to know

A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

Freelancer Mortgages Explained

Freelancing has seen an upsurge in recent years as more people have sought to take advantage of the remote working opportunities made more mainstream by the Covid-19 pandemic. Being able to set your working hours to suit your desired lifestyle can be a revelation, and it isn’t surprising to see more people wanting to continue to do this in the post-pandemic world. Many new remote workers haven’t considered the increased difficulty in securing a freelancer mortgage compared to a regular job with PAYE. 

With over 2 million freelancers in the UK, many lenders are now looking at how they can accommodate this new trend but may have highly variable conditions. This article will look at how best to navigate the freelancer mortgages landscape.  

Are There Different Freelancer Mortgages?

It is important to say at the outset that freelancers have access to exactly the same mortgages as those who are employed. They sometimes find it harder to prove their income, so it is more challenging to satisfy the lenders that they qualify for a mortgage.

Applying for freelancer mortgages can be difficult because there is a perception that their income fluctuates from month to month, and mortgage lenders prioritise stability. This can mean that lenders sometimes view freelancers and self-employed people as a risky investment and are concerned that the mortgage may not be affordable.

Lenders find it harder to get a clear picture of the complete financial position of freelancers than those who have regular jobs, so it is essential to go into the application process as well-prepared as possible. This will both increase your chances of being accepted in the first place and also help with determining how much you are allowed to borrow.

How Are Mortgages Assessed for Freelancers?

When you are a freelance worker, contracts can be variable. You may have several contracts that are scheduled to last for months. You may have some that are much shorter-term. What the mortgage lenders are looking for is proof of stability. If you can show them that you have regular clients who plan to continue working with you for some time, this should help your case—being able to demonstrate that your income is likely to stay the same or increase can help to show that you are a sensible risk for the lender to take. 

Mortgage lenders generally require accounts or tax returns when calculating how much they can offer you as a mortgage. If you are a sole trader, they may ask for an SA302 from HMRC. If you are structured as a Limited company, you must provide them with accounts signed off by a qualified accountant. 

How Much Income History Do Freelancers Need for a Mortgage?

The more income history you can provide, the better. Anything over three years should stand you in very good stead, as it will demonstrate your continued success and the viability of your business. If freelancing is your only income, you will need to have at least a year of trading history. Most lenders will consider you favourably if you freelance alongside a regular job. 

Your Mortgage Experts 

  • At Your Mortgage Experts we specialise in arranging mortgages for business owners and Limited Company Directors, as well as Sole Traders, Self-Employed Contractors, and Limited Liability Partnership.
  • We work with accountants regularly, with the knowledge and experience to understand your company accounts, how you receive your income, and the value that your business generates.
  • We have the expertise to present your business accounts to a mortgage underwriter in the correct way.
  • We can get you a mortgage not just based on your salary and dividend but also looking at the net profit of the business.
  • We have access to 1000s of mortgage product deals from a large number of mortgage lenders, including specialist lenders that best understand the more complex needs of business owners and limited company directors.
  • You will not get this expertise if you just approach your local bank or try to find your own mortgage online. To request a free consultation with one of our expert advisers call us today on 020 8154 1111.

Or drop us a line: 

Your Mortgage Experts, London W9 2HQ.

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Luca Bertolino

Mortgage Expert

Your Mortgage Experts is led by Luca Bertolino with 20 years experience in financial services and in the property market. Through Luca’s wealth of knowledge and expertise, Your Mortgage Experts have become a trusted adviser that clients have come to rely upon for all their mortgage and protection needs.

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