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 1 years accounts.

A self-employed mortgage borrower with less than 1 years accounts could be:

  • Businesses with recent changes in the structure
  • Mortgages for contractors
  • Self-employed for 1 year with bad credit
  • Remortgages for business investment
  • Companies trading for 1 year
  • Sole traders trading for 1 year
  • Self-employed buy to let mortgages

Why do self-employed borrowers with less than 1 years accounts find it hard to get a mortgage?

The reason why self-employed borrowers with less than 1 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 12 months is not deemed long enough to assess a borrowers 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 1 years account?

If you have bad credit as a self-employed borrower with less than 1 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 1 years accounts?

Yes, you may be able to get a mortgage even if you are self-employed with less than 1 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 1 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 1 years accounts.

What will a mortgage lender want to see for a self-employed borrower with less than 1 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

There are a few home buyer government schemes which may be able to help you increase your mortgage deposit or reduce the total cost of buying a home for you. They are:

  • Lifetime ISA- gives you a government bonus of £1,000 if you save the 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- same as above.

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 1 years accounts

Getting a remortgage as a self-employed borrower with less than 1 years account will be relatively easier than getting a mortgage as a self-employed borrower with less than 1 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.

John Bate

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.