Whatever form of income you have – be that pension income, contract income, investment income, bonuses or commission or a salary from your own firm or a global multinational company – mortgage lenders in the UK must abide by the same rules. These were brought in following the financial crisis and are designed to protect individuals in the UK from borrowing more than they can afford to repay.

There are more than 100 mortgage lenders in the UK and over 50,000 mortgage products available – proving that within that massive range, it’s highly likely you’ll be able to find a lender and a mortgage that’s right for you. Finding it comes down to knowing what sort of lender wants to lend to a mortgage borrower like you. That’s where a good independent mortgage broker comes in.

Talk to an adviser now.

Employed versus self-employed

While those in full-time PAYE employment can typically walk into their local bank branch and be offered a mortgage, this isn’t usually the case for the self-employed. This isn’t because it’s harder to get a mortgage if you work for yourself though.

High street lenders typically deal with customers who have more straightforward finances as they are far easier to process online. They also only have access to mortgages that they offer themselves, meaning a far narrower choice.

As is the case for contractors lenders will assess the income you earn through self-employment. They will typically ask to see between two and three years’ accounts that have been signed off by an accountant. Some specialist lenders do accept just one year of accounts however.

They may also want to understand how your business makes money and whether you have new clients or contracts in your future pipeline. SA302 forms also form a critical part of your application with lenders usually wanting to see these forms from the past two or three years.

If you are in a partnership, your share of the partnership’s profits will constitute your income and it’s this that lenders are likely to assess when considering your mortgage application.

There are different rules again if you are set up as a limited company. Rather than assessing your income based on your full earnings as they would a sole trader, lenders typically look at your salary and dividend income and calculate what you can afford on the mortgage based on this.

This can be challenging as tax accountants seek to minimise tax payable on income, sometimes by reducing the salary you take and maximising dividend income which, while taxed less, is more variable and not seen as so reliable by all lenders.

There are still options however, it’s just important to work closely with your adviser to ensure you get the mortgage. Some lenders are more able than others to look at your business in the round and assess your ability to repay the mortgage on this rather than just straightforward salary income.

A mortgage adviser with experience working with lenders that specialise in helping eslf-employed borrowers to buy their own home should be able to help you work out how much you can borrow and which lender will be right for you. Speak to an adviser now.