How to get a mortgage with 1 year’s accounts?

4 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.

How to get a mortgage with 1 year’s accounts?

For freelancers, contractors and companies in the UK, getting a mortgage can be especially daunting if they’ve only been trading for a year or less and only have 1 year’s accounts to show for it. Traditional mortgage lenders tend to require at least two years of accounts to determine eligibility for mortgage applications. However, the good news is that mortgage options are available for freelancers and contractors who have only been working for a year. 

In this blog post, we’ll explore how to get a mortgage with a single year’s accounts in the UK as a freelancer, contractor or company and what criteria need to be met to apply.

Why Consider a Specialist Mortgage Lender?

Many specialist mortgage lenders are considerably more flexible in their lending criteria and will consider mortgage applications from self-employed workers with only 1 year’s accounts. These specialist lenders also understand the specific needs of freelancers and contractors and offer mortgages that cater to their particular circumstances. However, the interest rates on specialist mortgages may be slightly higher than those traditional mortgage lenders offer. This is a reflection of the higher level of risk being borne by the specialist mortgage lenders.

Do I Need to Demonstrate a Reliable Income Source?

To get a mortgage with a single year’s accounts, you must demonstrate that you have a reliable income stream. It will be necessary to ensure that your business accounts, bank statements, and tax returns show a consistent income level for the past year. If you have been working in the same industry for a while before taking the leap to self-employment, it will be easier to prove your income stability.

Should I Save for a Larger Deposit?

Having a larger deposit increases the likelihood of getting approved for a mortgage. If you are able to save for a larger deposit, lenders will view you as less risky, and you may be able to negotiate better interest rates. Typically, mortgage lenders in the UK require a minimum deposit of 5% of the property’s value. However, if you can save for a deposit of 10% or even 15%, you’ll increase your chances of getting approved for a mortgage. 

This means that lenders will be looking more closely at the Loan-to-Value (LTV) ratio than they would typically, and being able to provide a larger deposit decreases the perceived risk.

How Do I Meet the Lender’s Affordability Criteria?

Mortgage providers will want to ensure that you can afford the repayments on the mortgage before approving your application. Therefore, it’s essential to clearly understand what you can realistically afford. You should consider the monthly repayments, fees, and interest rates when calculating how much you can afford to borrow. You can use a mortgage calculator to find an estimate of the monthly repayments for a particular loan amount.

Should I Seek Advice from a Mortgage Broker?

Suppose you’re unsure about how to apply for a mortgage or have specific circumstances that may complicate the process. In that case, it’s typically recommended that you seek the advice of a mortgage broker. 

A mortgage broker like Luca Bertolino can help you find the best mortgage options that match your criteria. They can also help you with the application process, find the best rates, and navigate the various requirements for the different mortgage providers. 

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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