If you are self-employed and looking to buy a home in London, the mortgage process works differently to a standard employed application. You will not see products labelled “self-employed mortgages” — the products are the same, but the way lenders assess your income is different. This guide explains what lenders look for, how income is calculated depending on your business structure, and what you can do to give yourself the best chance of approval. For an overview of our London mortgage services, see our London page.
London has a high concentration of self-employed professionals, contractors, and company directors — particularly in financial services, technology, media, law, and the creative industries. Many have income structures that differ materially from a straightforward PAYE applicant, and at London property prices, the difference between lenders in how they assess your income can determine whether a property is within reach.
Who Counts as Self-Employed for Mortgage Purposes?
Many lenders treat you as self-employed if you own a material share of the business you work for or have significant control over it. This typically includes sole traders, partners in a business partnership, limited company directors, and freelancers or contractors who operate through their own company.
If you are paid through PAYE and receive regular payslips, you are generally considered employed — even if you work on fixed-term contracts. However, some contractors who work through umbrella companies may face similar documentation requirements to self-employed applicants. The classification can vary by lender, so it is worth checking with a broker.
What Lenders Want to See
The core difference for self-employed applicants is how you evidence your income. Without payslips from an employer, lenders rely on your tax returns and business accounts to assess affordability.
Key Documents
SA302 tax calculations. Issued by HMRC, these show your total income and tax due for each tax year. Many lenders look for two years of SA302s, although some will consider one year if your income is strong and stable.
Tax year overviews. These accompany your SA302 and confirm that the tax shown has been paid. Lenders use them to verify the figures on the SA302.
Business accounts. Certified accounts prepared by a qualified accountant. Some lenders may have preferences around how accounts are prepared and evidenced. Many lenders expect the latest accounts to be reasonably recent at the point of application.
Bank statements. Personal and, in some cases, business bank statements for the previous three to six months.
Proof of upcoming work. If you are a contractor, some lenders want to see evidence of current or upcoming contracts.
You can download your SA302 and tax year overview from your HMRC online account. If you do not have these available online, allow extra time to obtain them from HMRC before starting your application.
How Lenders Assess Your Income
How a lender calculates your income depends on your business structure. Different structures are assessed differently, and different lenders may apply different rules to the same structure.
| Business structure | How income is typically assessed | Key considerations |
| Sole trader | Net profit from SA302, usually averaged over two to three years | Some lenders use latest year if income is rising |
| Partnership | Your share of net profit, averaged over two to three years | Only your individual share is considered |
| Limited company director | Salary plus dividends; some lenders also consider retained profits | Retained profit assessment varies significantly by lender — important in London |
| Contractor (day rate) | Annualised day rate with some lenders; others use SA302 | Contract length and continuity matter; evidence of upcoming work may be needed |
Assessment methods vary by lender. A broker can identify which lenders are most favourable to your specific structure and income profile.
Sole Traders
If you are a sole trader, lenders will look at your net profit as shown on your SA302 tax calculation. This is your income after business expenses but before personal tax and National Insurance.
Many lenders average your net profit over two or three years. If your income has been increasing year on year, some lenders may use only the most recent year’s figure, which can increase your borrowing. If your income has declined, lenders may use the lower figure or the average, depending on their criteria.
Limited Company Directors
If you run a limited company, many lenders will assess your income as salary plus dividends drawn from the company. This is the most common approach, but it can understate your actual earnings if you retain profits in the business rather than drawing them as dividends.
Some specialist lenders will consider salary plus net profit or salary plus retained profit, which can significantly increase the income figure used for affordability. These lenders are primarily intermediary-distributed and less visible on comparison sites.
In London, where a high proportion of self-employed buyers are company directors — particularly in financial services, professional services, and technology — retained profit assessment is frequently relevant. The difference between a lender that uses salary plus dividends and one that considers retained profits can be material at London property prices. A broker familiar with London’s professional buyer market can identify the lenders most likely to assess your income favourably.
Contractors and Day-Rate Workers
If you work on fixed-term contracts, some lenders will calculate your income based on your day rate multiplied across a working year. This can produce a higher income figure than your SA302 would show, particularly if you have not been contracting for long or if your day rate has recently increased.
London has one of the highest concentrations of contract workers in the UK — particularly in financial services, technology, consulting, and media. Some lenders assess contractor income using annualised day-rate calculations rather than historic tax documents. Depending on the structure and lender approach, this can sometimes produce a different affordability outcome than SA302 figures alone. Not all lenders offer day-rate calculations; those that do typically want to see a reasonable contract history and evidence of ongoing or upcoming work.
Bonus Income, RSUs, and Equity Compensation
London’s financial and technology sectors produce a significant number of buyers whose income includes bonuses, Restricted Stock Units (RSUs), carried interest, or other forms of equity or variable compensation. These are not covered by the standard self-employed assessment framework, but they affect affordability in ways that require careful lender selection.
For buyers with these income types alongside self-employed or director income, lender selection becomes especially important. For a detailed guide to how lenders treat bonus, RSU, and complex income structures in London, see our complex income mortgage guide.
International and Non-UK Resident Self-Employed Buyers
London has a significant international self-employed and contractor population. If your income is in foreign currency, you are non-UK resident for tax or SDLT purposes, or you are on a visa, the pool of lenders who will consider your application narrows considerably. Some lenders have specific criteria for non-UK income or overseas tax returns. A broker experienced with London’s international buyer market can identify the most suitable approach.
For more on the lending considerations for international buyers in London, see our international buyer guide.
Recently Self-Employed or Less Than Two Years of Accounts?
Many lenders prefer two or three years of trading history, but some will consider applicants with just one year of accounts. Criteria tend to be stricter: you may need a larger deposit, a strong credit history, and evidence that your income is stable or growing.
If you were previously employed in a similar role before becoming self-employed, this can sometimes strengthen your application. Some lenders take continuity of earnings into account when assessing risk.
How to Improve Your Chances of Approval
Use a qualified accountant. Lenders prefer accounts prepared by a chartered or certified accountant. Unqualified accounts may limit your choice of lenders.
Keep your accounts up to date. Lenders often expect accounts to be reasonably recent at the point of application. Filing promptly gives you more flexibility on timing.
Be aware of the relationship between declared income and borrowing capacity. Lenders assess affordability using the income shown on your SA302s and accounts. If your declared income is intentionally conservative, it may reduce the income figure a lender uses. Your accountant can advise on the wider implications.
Save a larger deposit where possible. A deposit of 10% or more opens up more products and can offset concerns about income variability.
Maintain a clean credit record. Late payments, defaults, or high levels of unsecured debt can make it harder to get approved.
Get your SA302 and tax year overview ready early. Downloading these from your HMRC online account before you start the process avoids delays.
Why a Broker Matters for Self-Employed Mortgages in London
Self-employed mortgage applications involve more lender judgement than employed ones. Lenders differ in how they assess income, what documents they accept, and how they treat retained profits, day rates, bonus income, RSUs, and short trading histories.
A whole-of-market broker can help identify lenders whose criteria may be better suited to your circumstances. This is especially important for limited company directors and contractors in London, where the difference between lenders can significantly affect borrowing capacity at London property prices.
Some specialist lenders are primarily intermediary-distributed, which means they are less visible if you search comparison sites or apply through a high-street branch. For more on how whole-of-market brokers work, see how whole of market brokers work.
Common Reasons Self-Employed Applications Are Declined
Understanding why applications are declined can help you avoid common pitfalls. Frequent reasons include: accounts that are too old or incomplete, a recent drop in declared income without explanation, applying to a lender whose criteria does not suit your business structure, adverse credit such as missed payments or defaults, and insufficient deposit. In many cases, a decline from one lender does not mean you cannot get a mortgage — it may mean the application landed with a lender whose criteria is not well matched to your structure. A broker can help you avoid this by matching your profile to the right lender before you apply.
Why We Wrote This Guide
Fitch & Fitch is an independent, whole-of-market mortgage broker with offices in Canary Wharf, Cambridge, and Colchester. We are an appointed representative of JLM Mortgage Network, authorised and regulated by the Financial Conduct Authority (FCA Registration Numbers 955014 and 300629). You can verify this on the FCA Register at register.fca.org.uk.
Fitch & Fitch has received recognition from independent industry bodies including the Mortgage Strategy Awards, Mortgage Introducer Awards, and Legal & General Mortgage Club Awards. These awards are judged independently and can be verified on the respective awards websites.
We wrote this guide because we believe an informed borrower makes better decisions. For further information about our London mortgage services, visit our London hub page.
Frequently Asked Questions
Can I get a mortgage if I am self-employed?
Yes. Being self-employed does not prevent you from getting a mortgage. The products available to you are the same as those for employed applicants — the difference is how your income is evidenced and assessed.
Is it hard to get a mortgage if you are self-employed?
It can be more complex than a standard employed application, particularly if your income structure does not fit neatly into a standard lender’s criteria. Applications involving retained profits, day-rate contractor income, recently started businesses, or overseas income require careful lender selection. A broker who understands how different lenders assess self-employed income can identify the most suitable route for your circumstances.
Can self-employed applicants get a 5% deposit mortgage?
Some lenders may consider 5% deposit applications from self-employed buyers, subject to criteria, affordability, and property type. Product availability at 95% LTV is more limited than at lower loan-to-value levels. A deposit of 10% or more can provide access to a wider range of lenders and products, although availability varies.
How many years of accounts do I need?
Many lenders look for two years, though some accept one year with a larger deposit and strong income evidence. Three years of accounts can improve your options further. If you have only one year of accounts, a broker can identify which lenders will consider your application and what additional criteria may apply.
Do lenders use my salary, dividends, or net profit?
This depends on the lender. Most use salary plus dividends for limited company directors. Some also consider retained profits, which can increase your assessed income. For sole traders, net profit is the usual figure. A broker can help identify lenders whose criteria may be better suited to your income structure.
What is an SA302?
An SA302 is a tax calculation issued by HMRC that shows your total income and tax due for a given tax year. It is one of the main documents lenders use to verify self-employed income. You can download it from your HMRC online account.
I minimise my income for tax purposes. Will that affect my mortgage?
It can. Lenders assess affordability based on the income shown on your SA302 or company accounts. If you have structured your finances to minimise declared income, this may reduce the amount you can borrow. Some lenders are more flexible than others, and a broker can help you find the best fit for your situation.
How much can I borrow if I am self-employed in London?
This depends on the income figure the lender uses and their affordability assessment. For self-employed buyers, the key variable is which income figure the lender uses — and that varies considerably by structure and lender. For a guide to borrowing at London price points, see how much can I borrow for a mortgage in London.
Next Steps
A useful next step can be understanding how lenders are likely to assess your income structure before beginning a property search or application.
For further information about our London mortgage services, visit our London hub page.
Related Guides
Complex Income Mortgages in London
How Much Can I Borrow for a Mortgage in London?
International Buyer Mortgages in London
Buy-to-Let Mortgages in London
The information above is for general guidance only and does not take account of your personal circumstances.