Mortgages for freelancers: Can you get a mortgage if you’re self-employed?


The process of applying for mortgages for freelancers and the self-employed can be challenging.

Especially as mortgage lending criteria has not kept up with the changes in freelance work and self employment.

The freelance community we spoke to have often found that a lot of mortgage lenders make it hard for freelancers to get a freelance mortgage.

As a result, you could end up with a mortgage that doesn’t match your level of freelance income, with a high interest rate just because you are a freelancer.

This guide to mortgages for freelancers is designed to help freelancers get a mortgage from more modern mortgage lenders that are prepared to work with freelancers and the self-employed and help them get the house of their dreams.

How have mortgages for freelancers changed?

One of the biggest ways that mortgages have changed is the introduction of independent professional mortgages, which have been developed as a way to help the rising number of freelancers and self-employed get on the property ladder.

An independent professional mortgage is the same as any other mortgage with regards to costs, but the lender will take a different approach to assessing your mortgage application.

Lots of mortgage lenders are now coming to terms with the freelancers and the self-employed and modernising their lending criteria to accommodate people that work for themselves.

Instead of looking at traditional forms of income like salaries, they now look at application through specialised criteria, designed exactly for the freelance community.

As a freelancer, you will now be assessed on a multiple of your annual revenue over the course of several years, letting you borrow an amount for your mortgage that matches your freelance income.

One thing to note – not all traditional mortgage lenders are using independent professional mortgages, so you need to find a specialist broker where you can access the competitive interest rates available to people who work full time.

Which lenders provides mortgages for freelances?

Traditionally, mortgage lending criteria have been based on individuals being in full-time employment, but with this approach freelancers weren’t able to borrow if their annual income fell short of what you should be able to secure.

But more and more mortgage lenders than ever before have realised the freelance sector is growing and have modernised their borrowing criteria.

These include major lending brands like Clydesdale, Virgin Money and Nationwide, as well as several newer specialist lenders like Metro Bank.


What types of mortgages for freelancers are there?

As we mentioned earlier, mortgages are mortgages; they’re the same whether you’re employed, freelance or a limited company. The only differences relate to the evidence of income that you must provide.

  • Sole trader Mortgage: Mortgage lenders want to see at least two years’ income statements or trading history – and some will want three. The more evidence of consistent levels of income that you provide, the more likely your application will succeed.
  • Limited company Mortgage: If you operate as a limited company, your income will likely consist of a salary, but you’ll also be able to take dividends from your company. Lenders will need to consider both as your salary and your dividends to calculate what you can afford. In some instances, lenders may be able to use your operating or net profit in addition to your salary.
  • Partnership Mortgage: Lenders will assess your income according to your share of the profits, using the same criteria as above.

How do freelancers qualify for a mortgage?

Every mortgage application from a freelancer or self-employed is assessed on an bespoke basis, but the main criteria are:

  1. You must have a current contract or several contracts that prove your income
  2. You need to prove continuity in the type of freelance work you do, typically over two years
  3. Income is often defined by an annualised rate, so what you earn over a typical year
  4. You will need a copy of a bank statement showing the trading accounts for your freelance work

Here’s what you’ll need as a minimum to qualify for a freelance mortgage:

  • At least 2 years of trading accounts or bank statements
  • Current contracts for freelance work
  • 10% deposit saved (at least!)
  • Good credit score
  • Minimal debts
  • Personal identification (Drivers licence or passport_
  • Proof of address (Bank statements, council tax, bills)

Your debts are also part of the affordability equation, which is why it is helpful to reduce your debts before applying for a mortgage.

If you’re not sure what you need or if you’ll qualify, most freelance mortgage lenders will take a look at your individual circumstances and feedback on your chances with no obligation.

The main point to keep in mind is that you stand a good chance of getting a mortgage if you can demonstrate a history of earning as a freelancer.

How is my freelance mortgage application assessed?

If you were a full time employee, your mortgage application would be assessed on your annual salary.

But if you’re self employed, you can use the salary you take out from your business, any dividends and/or net profit if you run a limited company, plus prove you have steady income through providing relevant client contracts and bank statements for at least two years.

If you’re using an umbrella company then it will be your PAYE income, the same as a normal employee – but you may be asked to show the contracts for clients you’re working with.

When you are unable to provide trading accounts for your freelance work, your mortgage application is evaluated based on your gross contract rate across all your projects and clients. The current total rate or fees of all your contracts will be used to set a borrowing figure.

How much can freelancers borrow for their mortgage?

Mortgage lenders use complex methods to estimate how much you can afford to borrow for your freelance mortgage.

To make a call on the amount you can afford, lenders review your past income, your current spending habits and the details of any regular contracts you have at the moment to evaluate the maximum loan amount they will lend you.

How can freelancers improve their credit score?

The credit score is one of the first checks a lender will make on you, so it’s important that your credit score is positive and there are no issues around debt or other red flags on your credit report.

Your credit score is based on your history of borrowing and repaying, including mobiel phoen conteacts and credit cards.

The better your borrowing and repaying history, the higher your score and the more likely you’ll pass your assessment for a freelance mortgage.

To check your credit score, you’ll need to register with one of these credit reference agencies to check your credit history:

If you uncover any issues with your credit score, you may need to fix them or wait until your credit score improves. A good credit rating is key to getting a freelance mortgage.

Are self-certification mortgages still available?

Before the financial crisis in 2008, freelancers  could apply for a “self-certification” or “self-cert” mortgage. With "self-cert" loans, freelancers didn’t have to prove their income using bank statements or contracts.

They simply told the mortgage lender what they earned and their freelance mortgage applications were sometimes approved with no thorough checks made.

Although self-cert mortgages were aimed at freelancers, abuse of the system came about where people other than freelancers were using self-certification mortgages and exaggerating their income in order to secure a bigger mortgage.

Self-certification mortgages are now banned, making it now much more difficult to get a mortgage for freelancers.

Tips for freelancers looking to get a mortgage

Here are a few more tips to help you stand the best chance of qualifying for a mortgagee as a freelancer.

  1. Make sure you have all your contracts with your clients: When putting together your mortgage application, get together all of your current contracts in one place. It’s important to be able to show lenders not only how much income you have, but also how long you have remaining on your jobs.
  2. Avoid lengthy gaps between projects :There are many benefits to working as a freelancer, but you should try and avoid any gaps of anything more than 6-8 weeks as a guide. Mortgage lenders want to see consistent income and contracts stretching back 1for two years before to your mortgage application – long gaps between receiving freelance income don’t look good.
  3. Be realistic about what you can afford: A mistake that is far too common to many freelancers is being unrealistic about what repayments you can afford. When drafting your freelance mortgage application,  make sure the repayments you commit to are going to be affordable for you.
  4. Have at least a 10% deposit – or more if you can: Mortgage lenders will require you to have at least 10% deposit when you apply for a freelancer mortgage. And if you can stretch to 20%, then you can get even better mortgage rates.
  5. Look for mortgages that allow additional payments: Some freelancers may find themselves with more money than they need on a day-to-day basis thanks to high-value projects or frequent work. If this is likely to happen to you. try to find a mortgage that lets you to pay large amounts off your mortgage in lump sums, on top of your regular monthly repayments. This will help you to pay down your mortgage quicker and could save you thousands in interest.

Finding a Freelance Mortgage

If you’re in any doubt or don’t have time to look for a freelance mortgage yourself, a mortgage broker can be a lifesaver when you are self-employed.

They’ll know which lenders are willing to lend to freelancers and, most importantly, who will offer you the best rate.

Good luck getting your freelance mortgage, or if you already have got your mortgage leave details of your mortgage for freelancer experience below.

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