In this brief guide, we are going to discuss getting a mortgage as a self-employed borrower with less than 2 years worth of accounts.

As a self-employed borrower getting a mortgage could be challenging as mortgage lenders find it hard to prove your income. You will usually need to be self-employed for at least a year to get a mortgage but there are mortgage lenders that may consider you for a mortgage if you have less than 2 years accounts.

A self-employed mortgage borrower with less than 2 years accounts could be:

Why do self-employed borrowers with less than 2 years accounts find it hard to get a mortgage?

The reason why self-employed borrowers with less than 2 years accounts find it hard to get a mortgage is that mortgage lenders will not be able to have a analyse the borrower’s income or finances for a sustained period of time and a period less than 24 months is not deemed long enough to assess a borrower’s financial data.

Mortgage lenders will usually request to see at least three years of accounts when analysing the mortgage affordability of self-employed borrowers.

In the past borrowers may have been able to use self-cert mortgages which essentially allowed the borrower to state an income without the need to provide any proof of this income.

Self-cert mortgages were banned in the UK but can still be accessed on Uk properties from Europe. They do come with an increased risk of a home repossession so beware.

A self-employed mortgage broker may be able to help you get a mortgage as they will have a niche understanding of the market.

Can you get a self-employed mortgage with bad credit and less than 2 years account?

If you have bad credit as a self-employed borrower with less than 2 years accounts then getting a mortgage could prove to be even more challenging but there may be mortgage lenders that may consider you.

Bad credit could include:

  • A CCJ
  • An IVA
  • A debt management plan
  • A default
  • A bankruptcy

If you have had a [CCJ]() then most mortgage lenders will expect to see that you have satisfied the CCJ.

If you were previously bankrupt then most mortgage lenders may only lend to you from 12 months after you have been discharged from bankruptcy.

Can you get a mortgage if you are self-employed borrower with less than 2 years accounts?

Yes, you may be able to get a mortgage even if you are self-employed with less than 2 years accounts but it may be difficult.

In this case, the mortgage lender will have to look at your income for the period you have and make projections as to what your future income may be.

The mortgage lender may also request that you increase your mortgage deposit to ensure that their risk is reduced by offering you a smaller loan to value.

As a general rule, you can usually borrow between 3 to 5 times your income.

Most mortgage lenders will want to wait till you have at least 2 years worth of accounts and have submitted a tax return but there are a few mortgage lender that will look at your case even though you have not submitted a tax return and have less than 2 years accounts.

What will a mortgage lender want to see for a self-employed borrower with less than 2 years accounts?

The mortgage lender may want to see:

  • Your CV
  • Your current up to date accounts going back as far as possible
  • Your tax returns
  • Your SA302

You could boost your mortgage deposit for a self-employed mortgage

Government schemes help you reduce the amount of mortgage deposit you may need to put down, reduce the price of the property or create a structure that increases your mortgage affordability much sooner than it would have been.

Some of these include first-time buyer government schemes whilst others in this list are accessible to you even if you are not a first-time buyer.

Government schemes are not available to you if you are getting a buy to let mortgage.

The Government schemes include:

  • Lifetime ISA– gives you a government bonus of £1,000 if you save a maximum £4,000 a year.
  • Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
  • Help to buy equity loan– gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
  • Shared ownership– You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
  • Armed forces help to buy– similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
  • Rent to buy– This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
  • Right to buy– allows you to buy your home at a discount price.
  • Preserved right to buy– same as above.
  • Right to acquire– similar to the above.

Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.

You may also be able to use a host of mortgages with the help of your family.

They are a certain type of mortgage known as a family springboard mortgage, they include mortgages from lenders such as the Barclays family springboard mortgage, the Lloyds lend a hand mortgage or the post office family link mortgage.

Remortgaging as a Self-employed with less than 2 years accounts

Getting a remortgage as a self-employed borrower with less than 2 years account will be relatively easier than getting a mortgage as a self-employed borrower with less than 2 years accounts. This is mainly due to the fact that as you already own your property and have hopefully been making your mortgage repayments in time you will have built some equity in your property. This will make it easier for you to find mortgage lenders willing to make you an offer.

Use a mortgage broker for your mortgage in principle

You may want to use an independent mortgage broker to help you get a mortgage on your new home.

Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases.

This could be over 11,000 mortgage products. This may have some advantages rather than going directly to a mortgage lender.

A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you based on your mortgage affordability.

After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle

This will allow you to shop for your home as more estate agents and sellers may take you seriously and it will also give you confidence that your mortgage is indeed a possibility before you make a full mortgage application. 

Once you have found a home you want to buy and are satisfied with the mortgage offer for your mortgage then the mortgage broker will then look to get you a mortgage offer.

This will come with a key facts illustration document that details the features of your mortgage including how much you will pay per month.

It will also contain information on if there are any limits such as early repayment fees, or annual overpayment limits.

If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.

Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it.

They will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer, and set a completion date with the seller or their conveyancer.

This will then bring an end to the conveyancing process, at which point you will receive the keys to the house and move in.

In this brief guide, we are going to discuss getting a mortgage as a self-employed borrower with less than 2 years worth of accounts.

If you have any questions or comments please let us know.

If you are in need of advice about your money and you live in the UK then you may contact the Money Advice service over the phone or via chat for impartial advice.

You can also contact the debt charity “Step Change” if you are in debt and need help.

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.