How lenders assess self-employed income
Lenders usually want at least two years of accounts or tax calculations (SA302s) with tax year overviews from HMRC. Many average your profits over the last two or three years; some use the latest year if it's lower or if your profits are rising.
Limited company directors are often assessed on salary plus dividends, though some lenders use your share of the company's profit.
Worked example
With average profits of £45,000 at 4.5 times, you could borrow about £202,500. With a £25,000 deposit, that's a property of about £227,500, and the payment at 4.5% over 25 years would be £1,125.56 a month.
Before you apply
Lenders may average your profit over several years and ask for tax calculations, so the figure you enter should match what they will see.
A broker who works with self-employed clients can help find lenders whose criteria suit how you're paid.
How the result is worked out
The loan is your average annual profit multiplied by the income multiple you choose. The property price is that loan plus your deposit, and the monthly payment is the repayment on the loan at your rate and term.
Enter the profit figure your lender is likely to use, which may be an average of several years rather than your latest year.
Inputs for the self employed home loan calculator
Average annual profit
Your average taxable profit over the last two or three years, or salary plus dividends if you're a company director.
Income multiple
4.5 times is common; each lender sets its own.
Deposit
Your savings towards the purchase.
Interest rate (per year)
The annual interest rate on your mortgage. The rate shown is only an example, so enter the rate from your quote.
Term
How many years you'd repay over. A longer term lets you borrow more for the same payment but costs more interest.
CALCULATOR QUESTIONS
Self-employed home loan calculator questions
Can I get a mortgage if I'm self-employed?
Yes. Most lenders want at least two years of accounts or SA302 tax calculations.
Which income do lenders use?
Often an average of your last two or three years' profits, or your latest year if it's lower.
I'm a company director. What counts?
Usually salary plus dividends; some lenders use your share of the company's profit.
Is this a guarantee?
No. It's an estimate; the lender decides.