Mortgages for Sole Traders

If you’re a sole trader and are looking for a mortgage, you can still apply for the same range of mortgages as people in employment. The only difference is that because you don’t have an employer to confirm and verify your income, you will need to provide evidence to your lender that you can make your monthly repayments.

There are come specialist mortgage lenders which provide self-employed mortgages (link to this page once built) that will also lend to sole traders, provided you meet their criteria. As a sole trader that will usually entail providing at least 12 months’ trading history and being able to prove a regular and reliable income.

If you have a longer trading history, it will help as the more income you can prove, the better.

What is a sole trader mortgage?

There’s not such a thing as a sole trader mortgage. If you are a sole trader, whether self-employed or the director of a company, you’ll still have access to the same range of mortgages products as people in full-time employment. Lenders will, however, apply a different set of criteria to sole traders.

If you derive more than 25% of your main income from your own business, you will be considered self-employed by most lenders. This means that you will have to provide compelling evidence to your lender of your ability to afford and repay your mortgage.
Up until 2014, you could have simply certified your income to your lender yourself, without having to provide any documentation or evidence. These so-called self-cert mortgages, however, was outlawed due to concerns that borrowers were taking on mortgages that they couldn’t afford to repay.

Now, if you are a sole trader and are applying for a self-employed mortgage, you will be required to provide at least 12 months’ trading history to your lender, who will use this to calculate your affordability, based on the income you’ve declared and whether they think it will be sustainable over the full term of the mortgage.

It’s important to remember that different lenders have different rules, so working with an expert mortgage broker will ensure you get the right advice to help you get ready prior to submitting your application.

How do mortgages for sole traders work?

Applying for a sole trader mortgage is a relatively straightforward process. While you’ll still have access to the same lenders and mortgage products as everyone else, you’ll just need to prove your income in a different way. All that lenders are interested in is your ability to pay.

Even if you’re a sole trader, provided you can meet the lender’s criteria, you’ll be eligible for the same mortgage rates as anyone else. However, there may be certain circumstances where a bit of specialist support is needed.

For example, if you don’t have a long trading history, if you have an income which is unreliable or fluctuates month by month, or if you have had credit problems in the past, either at work or in your personal life, these can all have an impact on the way lenders will view your risk profile.

In cases like this, My Mortgage Pro can connect you with an expert mortgage broker who specialises in mortgages for sole traders and can ensure you get the right advice to help you get ready prior to submitting your application.

Can I get a mortgage for sole traders?

If you are a sole trader, you can still get access to the same range of mortgages as anyone else. In fact, if you can prove that your income has increased over time, you may even be able to get access to the best interest rates and deals on the market.

It all depends on your personal circumstances. It is possible to get a mortgage as a sole trader, provided you can demonstrate to the lender that you can afford the repayments and can manage your finances sensibly. This means proving you’ve got a steady income, but also doing things like making sure you’ve met any other outstanding credit or loan payments on time, ensuring all of your regular outgoings – such as utility bills and credit cards – are paid on time, and not taking on any new debt.

Also, the more money you have for a deposit, the better, as this will help to bring down the total amount you need to borrow and might even help you to get a better mortgage interest rate.

Contact us for more information about mortgages for sole traders

My Mortgage Pro is a professional mortgage information service. While we don’t give advice, we aim to provide you with simple, jargon-free, no-nonsense information about mortgages for sole traders to help you make the right choice. We can also connect you with a specially selected panel of leading mortgage advisers, who are authorised and regulated by the Financial Conduct Authority, who will provide advice tailored to your specific circumstances and help you find the right sole trader mortgage, fast.

To find out more and request a call, fill out the form below.