Mortgages for Sole Traders

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.

Mortgages for Sole Traders

Becoming your own boss is almost certainly one of the most liberating feelings in the world, but it is also a decision that is not to be taken lightly,  as there are also unique difficulties in self-employment. Finding clients and establishing your business can be difficult initially, and many businesses fold inside the first year. Something that many find especially difficult is acquiring a suitable sole trader mortgage. 

There aren’t different mortgages for sole traders, but meeting the qualifying criteria can be much more complicated. In this article, we look at the mortgage lender criteria and how to become a homeowner as a sole trader successfully.

Can Sole Traders Get a Mortgage?

Firstly, can sole traders get a mortgage? Yes, of course, there is nothing that should exclude a sole trader from applying for a mortgage, just like anyone else. There isn’t a specific type of mortgage that is only aimed at sole traders but there are some that may suit people in this category more than others. 

Many mainstream mortgage lenders require high deposits and years of trading history to offset what they see as an increased risk that a sole trader may end up defaulting on the mortgage. Some specialist lenders that work with sole traders can be far more flexible. There are many options out there and this is why speaking to a qualified mortgage broker like Luca Bertolino can help to clarify the situation.

How Long Should I Wait Before Applying for a Mortgage?

When you are a sole trader thinking about applying for a mortgage, it is advisable to wait for at least a year to have some documentary proof of your freelance income and direction of travel within your field. The longer your work history, the easier you get accepted for a mortgage. If you can provide three years of information, this will give the mortgage lenders a more complete picture of your finances, and this will be to your benefit.

If you are a contractor who is registered as a sole trader, you may be able to apply for a mortgage after six months rather than waiting an entire year. There is a UK Government scheme for those involved in construction called a Construction Industry Scheme (CIS)

mortgage that may be worth exploring if you are in this situation.

What Documents Do I Need to Provide to Lenders?

When you apply for a mortgage as a sole trader, most lenders will ask you to prove your earnings via an SA302 that you can obtain via HMRC. Showing them accounts or your trading history can also be helpful. You must also show them bank statements for the previous three months. 

In addition to the above, you will be required to show all the standard documents that any other mortgage applicant is asked for. These documents can include “proof of identity”, including a driving license and/or a passport, and “proof of address”, which can be a council tax bill, utility bill or bank statement.  

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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