Joint Mortgage Self-Employed

Podcast approved by The Openwork Partnership on 13/02/2025

Can I get a joint mortgage if I’m self-employed?

You can definitely get a mortgage if you are self-employed and applying with a partner. If you are self-employed and your partner isn’t, a lender would just assess your partner under their employed rules, and you as self-employed.

If you are both self-employed, the lender would just assess your income and calculate how much you can borrow based on their self-employed criteria for both of you.

How does being self-employed affect your eligibility for a joint mortgage?

It doesn’t affect your ability to get a mortgage if you’re self-employed and applying for a joint mortgage. What may have an impact, however, is if you’ve only had a short stint of time to prove your income.

People who are employed just need three months pay slips with the majority of lenders, but if you’ve only got three months proof of self-employed earnings, you will massively struggle to get a mortgage.

You need proof of sustainability by showing you’ve been self-employed for the long run. Otherwise, lenders may decline your application or potentially restrict how much you can borrow.

What documentation is typically required for self-employed individuals applying for a joint mortgage?

If you’re self-employed and applying for a joint mortgage, the documents to prove your income will depend on how your business is set up. If you’re a sole trader, lenders will want to see your last two years’ tax calculations and tax year overviews.

If you’re a limited company director, they’d want those tax calculations and tax year overviews, but they’d also want to see your limited company accounts submitted to HMRC.

Also, as well as providing your personal bank statements, you may also need to provide bank statements for the company you are running. As with a standard mortgage application for an employed person, you also will need your proof of deposit, ID and a copy of your credit report.

Are there any specific requirements or restrictions for self-employed applicants considering a joint mortgage?

If you’re applying for a joint mortgage and you are self-employed, some lenders may lend you less than if you were employed. For example, some lenders may offer six times annual salary if you are employed and applying for a mortgage.

If you’re self-employed, however, that can instantly knock you back down to the standard 4.5 to 4.75 multiple. That can be a bit of a restriction on how much you can borrow.

Other than that, the only restriction is your proof of your income. If you can document that you earn £50,000 through self-employment they would still lend you the same amount as someone employed earning £50,000. A couple of lenders might just lend you slightly more if you are employed.

How can self-employed individuals improve their chances of being approved for a joint mortgage?

If you’re self-employed and applying for a joint mortgage, a couple of points can improve your chances of being accepted. The first one is how long you’ve been self-employed for.

If you’ve been self-employed for one year, it’s still possible to get a self-employed mortgage but you may have limited options. If you have been self-employed for two years, that opens the door to the vast majority of lenders.

Second is your deposit. Like with all mortgages, having a bigger deposit means the lenders are taking on less risk. They therefore will potentially lend you more, and at a more attractive rate.

Last but not least is your credit score. However much you’re earning, an impaired or bad credit report and credit history can reduce the lenders you’ll have access to.

If you’re applying for a mortgage, whether it’s in the next six months or the next six years, it’s worth looking at a copy of your credit report. If anything needs to be ironed out, get it sorted out as soon as possible.

If you have already fallen behind with payments, bring them up to date quickly, so that when you do apply for the mortgage, it just shows as a blip in the past and you have since brought your credit back up to scratch.

Can self-employed applicants include their spouse or partner in a joint mortgage application?

Yes, of course. If, for example, I was applying for a mortgage with a partner and I am self-employed, they would assess the incomes separately.

First they would assess my income. Say I earned £35,000 per year – they would assess that based on the last one or two years worth of accounts. They would then assess my partner’s income. If my partner is employed on £50,000, they would use that full amount.

If you’re self-employed and your partner is employed, you still have that employed income to use towards the mortgage application.

Are there any additional considerations for self-employed individuals applying for a joint mortgage, compared to employed individuals?

One of the main considerations is showing sustainability in your business. If you have just set up your limited company – or your business as a sole trader – and you’ve only been doing that for three months, the lender has no history to show the business is profitable and that you are earning money.

Having that longer term sustained income of one or two years will open the doorway up to the vast majority of lenders. If you can get a bigger deposit together and you have good credit, that also opens up your opportunities.

What are the advantages and disadvantages of applying for a joint mortgage as a self-employed individual?

There’s a big advantage to applying for a joint mortgage being self-employed, rather than applying on your own. As long as the person you’re applying with has an income to go towards the mortgage application, it gives the banks peace of mind.

Because you’ve got two incomes, they can lend you more. A double income into the household makes bills and the mortgage more affordable, so lenders will lend you substantially more money.

Also, if you are self-employed and applying with a partner who is employed, for example, their income can support the household. Many businesses have peaks and troughs, so in quieter months, you still have that sustained income coming in.

The negatives will depend on each case. Perhaps you have amazing credit, a good deposit and you are self-employed – but your partner has terrible credit. That could reduce the lenders you’ve got access to and you may be charged a higher rate.

But if you and your partner both have good credit and you’ve both got an income, any downsides are more personal than mortgage-related.

How can self-employed individuals navigate potential challenges or obstacles when applying for a joint mortgage?

A lot of our self-employed clients come to us having spoken to banks or brokers that aren’t specialised in the self-employed space, and are told they can’t borrow what they need.

A typical example is where a limited company director hasn’t taken much from the business. Perhaps it has made £200,000 profit, but they have only paid themselves £40,000.

If you’re looking at the incorrect lenders, they only look at what you’ve drawn from the business rather than what the business has earned itself. That can massively reduce how much you can borrow.

However, some lenders will use the profits a business has earned. If you’re a 100% shareholder, it is technically your profit, so we’ll be able to get you a much higher borrowing amount.

The biggest point here is to speak to a broker that specialises in self-employed mortgages. We’ll know exactly where to put you. If you’re doing the research yourself or just speaking to your bank, the amount you can borrow may be massively reduced – or even worse, you could just be told you can’t do it.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Approved by The Openwork Partnership on 13/02/2025.