Self-Employed 1 Year Accounts Mortgage

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Mortgage With One Year’s Accounts

Anthony McQuilliam talks us through mortgages with one year’s accounts.

Podcast approved by The Openwork Partnership on 10/04/2025.

Can I get a mortgage with one year’s accounts?

Yes, you can, but it does limit your options. There are a lot of lenders that will look at a client’s most recent year’s accounts – which helps if your business has been a lot more profitable than previous years. But these lenders will also consider you if you’ve only been self-employed for one year.

How do I prove my income with one year’s accounts?

This depends on how your business is set up. If you’re a sole trader the lenders want to see your most recent year’s tax computations and tax year overviews. If you’re a limited company director, they will want to see these tax documents plus your most recent business accounts, as sent to HMRC.

How much can I borrow with one year’s accounts?

If you’re a sole trader the lender would look at your most recent year’s tax year overview and tax computations to see the profit you’ve earnt for the year. The lenders then multiply that by 4.5 to figure out how much you can borrow. They will still take into account your outgoings, such as credit cards, loans, car payments etc.

If you’re a limited company director it works slightly differently. Some lenders will look at the net profit from the business and also the salary you’ve paid yourself. That can usually give you a higher borrowing amount compared with basing it on what you’ve actually withdrawn from the business.

Again, they would use an income multiple on that net profit and director’s salary at 4.5 times to calculate how much you could borrow.

Can I remortgage with one year’s accounts?

Yes, of course. It’s exactly the same principle – the majority of lenders would still look at the 4.5 times income multiple to see how much you can borrow.

But let’s say you were employed when you took your mortgage out five years ago. Now you’re coming up to your remortgage and you’ve just recently set up a new business. If you haven’t made enough profit to borrow the amount you need to remortgage, you have the option to do a product transfer. This is simply staying with the same lender, which isn’t based on how much you earn. You will just move onto whatever new product is available.

The only problem is if that rate is expensive compared with other options. You may not have access to the cheapest deals in the market. But at least you can have an option to change your product and choose how long to fix your interest rate for.

What if I have bad credit? Can I still get a mortgage with one year’s accounts?

Yes, of course. There’s a particular lender I have in mind that specialises in both bad credit and people with one year’s accounts. Also, if you’re a limited company director it’s one that uses your director’s salary plus your net profits.

It’s a lender that charges a slightly higher interest rate, and you would need more deposit – usually in the region of 10%. But if you’re happy with that and you really want to buy that dream property, a little bit more interest isn’t a problem as long as it’s affordable for you.

Are there many lenders that lend with one year’s accounts?

There are quite a lot of potential lenders, including high street names. Even if you have bad credit plus one year’s accounts, while it limits the options, there are a few different providers we can go to.

How do I apply for a mortgage with one year’s accounts?

The big issue if you’re doing this on your own is that you’ll have to speak to all the lenders individually. That would involve a mortgage appointment with each one to find out if they can lend to you with one year’s accounts. With a lot of lenders out it will be an out-and-out ‘no’.

That can consume so much time, especially as you need to be getting on with running your business. You won’t have time to rush around speaking to every lender. So the best way, in my opinion, is to speak to a mortgage broker. We specialise in this area and have helped a lot of people that have just started their own business to get mortgages.

We have the experience, knowledge and expertise to know which lenders are appropriate. We will save you so much time and money and let you concentrate on running your business.

What else do we need to consider for mortgages with one year’s accounts?

It certainly gives you a lot more options if you have two years’ accounts, but if you’ve found that dream property and desperately want a mortgage, it’s definitely doable. If we can get you in with a high street lender the rates may even be lower than you might expect.

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

Approved by The Openwork Partnership on 10/04/2025.

Your home may be repossessed if you do not keep up with your mortgage repayments.

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Our highly experienced Advisers are ready to help you with either buying or remortgaging a home, protecting your property and lifestyle along with saving you time and effort, ensuring you have a competitive deal right for you.

Self-Employed 1 Year Accounts Mortgage (Part 2)

Anthony McQuilliam answers more of your questions on how the mortgage process works if you are self-employed with one year’s accounts. Episode two of two, recorded in May 2025.

Podcast approved by The Openwork Partnership on 28/05/2025.

Can I apply for a joint mortgage with a partner who has a regular income, even if I’m self-employed with one year of accounts?

If you’ve got one year’s accounts and you approach the correct lender, they will assess your year’s profit and your partner’s income completely separately, but then combine the totals.

So if you earn £50,000 profit and your partner earns £40,000 on their salary, they use a combined income of £90,000 for the application.

While having one year’s accounts doesn’t give you access to every lender on the market, a handful of lenders will be more than happy to do that for you.

Are there any specific challenges or risks for the self-employed when applying for a mortgage with one year of accounts?

Not necessarily. If you’re applying for a mortgage with one year of accounts as a sole trader, or even under a limited company, the main risk is approaching a bank who would never accept just one year’s trading history.

If a lender accepts a year’s history as part of their criteria, as long as you’ve got a deposit, proof of your income and your credit matches the lender’s requirements, there’s no real risk. It’s no different than for someone in an employed job.

What happens if my one year of accounts shows low or fluctuating income? Can I still qualify for a mortgage?

I would ask for the definition of low. Low income is subjective, depending on who you speak to. Lenders usually lend you between 4.5 to 5.5 times your annual income – so with low income you may not be able to borrow as much, but you can still get a mortgage.

Fluctuating income tends to be where someone has two years’ accounts or more, and the accounts have changed massively in the most recent year. If you’ve only had one year’s worth of accounts, that isn’t something you’d technically be affected by.

What impact does credit history have on the mortgage application process for self-employed individuals with one year of accounts?

If you’re applying for a mortgage and you haven’t got great credit, it doesn’t stop you getting a mortgage. It could just limit the options available.

There are quite a few speciality lenders that specialise in people with bad credit and are also happy with one year’s worth of accounts. To qualify for these, though, depending on how bad the credit is, you may need around 15% deposit as a minimum.

Are there any government schemes or support to assist self-employed individuals with one year of accounts to get a mortgage?

No, not at all. Unfortunately, the government has no specific schemes for the self-employed. There’s no specific scheme at the moment [correct at the time of recording in May 2025].

Are there any alternatives to traditional mortgages that may suit self-employed individuals with one year of accounts?

We can only give advice on mortgages – anything outside of the traditional mortgage realm isn’t something we can advise on.

But ultimately, there are options. If you’ve got one year’s worth of accounts and you’re applying for a mortgage, the only real option really is going down the mortgage route.

There are a few lenders out there to help you if you are self-employed with one-year’s accounts.

Can I use additional sources of income – such as rental income from properties, or dividends – for a mortgage if I’m self-employed with one year’s accounts?

Yes. For example, you might have a benefit income such as PIP or Universal Credit. You may get maintenance from an ex-partner. As long as it’s part of the lender’s criteria, there are multiple different income types you can use.

If you have any rental properties, as long as you’ve been renting them out for a long enough period, the lenders will use the income from those, as well.

Is it possible to make overpayments or pay off a mortgage earlier if I’m self-employed with a year of accounts?

Yes. Once you’ve actually got the mortgage, having a year’s accounts won’t affect you. It’s only a factor when applying for the mortgage, because not all lenders will take it and it’s assessed in a certain way.

Once you’ve got the mortgage, you get the same overpayment allowances as anybody else. Many lenders give a 10% overpayment allowance each year, which applies to everyone that has that mortgage.

Can I get a Buy to Let mortgage with one year’s accounts? Are there any differences here?

The main difference with Buy to Let is that many lenders need you to have a minimum income, which you can document and prove with your one year’s worth of accounts.

The main affordability is based on how much the property would rent out for. Ultimately, you can still get a mortgage with one year’s worth of accounts. But it’s not solely stressed on your income. It’s also about how much the property will rent out for.

What steps can I take to increase my chances of a mortgage with one year of accounts? How can a mortgage broker help?

There are three main factors – we call it the trifecta – to get your mortgage agreed. One is income, and if you’ve got a year’s worth of accounts, you can still get agreed with a handful of lenders.

The next one’s your deposit. The bigger the deposit you’ve got, the more access you have to lenders and the better the interest rates are. Lenders will also be more lenient if you’ve had any missed payments. And talking of missed payments, the third factor is your credit. The better your credit is, the easier it is to get agreed for a mortgage.

Increasing your chances is all about preparation. Even if you haven’t got your one year’s worth of accounts yet, it’s always worth having a conversation with a mortgage broker nice and early in the process.

Then, we can see what options you’ve got available and make sure that any potential issues can be ironed out before you actually submit your application.

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

MOST BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.

Approved by The Openwork Partnership on 28/05/2025.