Sole Trader Mortgage

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Can I get a Sole Trader mortgage?

Absolutely! As a sole trader you may find it more difficult to get a mortgage. You just have to prove your income a bit more for a sole trader mortgage than an employed person. As a sole trader you may do your accounts yourself or you have an accountant do them for you. Lenders will generally want to see two or three years worth of accounts to prove your income. However some will consider one year of accounts. A bit more information about that below.

How long have you been a sole trader for?

3+ years

You will be able to access most lenders, some will take an average of the three, or last two years. Depending on if you made more or less last year they will either take your latest year or an average of the last two or three years.

2 years

This still lets you access a lot of lenders, and will again usually be averaged over the two years. Some will take your latest year. If you have made less in your most recent year they are likely to use that income, rather than an average.

1 year

As someone newly self employed you’ll be the most restricted in what lenders you can use. That said there are still a few options for you.

Documents you’ll need for a sole trader mortgage

Whilst it will vary from lender to lender, there are some that most lenders will want to see, for example:

Bank statements

These should be scans, not photos. Also they generally need to have your name and address on them.

Tax Return/SA302s

These can be downloaded from the government website. We have a guide here –

Proof of ID

Again, scanning, not photos is best. A Passport is usually the best option, however both sides of a driving license should be okay as well.

Due to Covid-19 a lot of lenders are asking for additional information for example business bank accounts. Take this into account when applying for a mortgage.

How do lenders assess sole trader mortgages?

This varies slightly from lender to lender however most will take an average of your last 2 years net profits. That said, you will get some that take your latest year, some an average of the last 3 years. It’s probably best to speak to a specialist mortgage advisor that way they can help find the right mortgage for you.

Sole trader mortgage rates

As a sole trader you pretty much have access to the same rates as an employed person. Depending on what you do there may be specialist products available to you, for example if you are a professional. Speak to a specialist mortgage advisor so that you get the right product to suit your needs.

Commercial mortgages for sole traders

Quite often sole traders will need commercial mortgages. Can you get a commercial Sole Trader mortgage? Absolutely, it’s worth speaking to a specialist commercial advisor however to make sure you get the right one. Get in touch and we’ll point you in the right direction.

Sole traders with bad credit

Bad credit can make getting a mortgage more challenging. At Albion Forest Mortgages we specialise in getting mortgages for Sole Traders with bad credit.

The first thing you should do is check your credit file, we recommend Checkmyfile for this. Once you have got your credit report speak to your Bank or a specialist mortgage advisor. They will be able to advise your next steps.

Can I be a sole trader and PAYE?

Sometimes you have PAYE income and you have self employed income as a sole trader which complicates things. Some lenders will let you use both toward your affordability. This can be beneficial when you are looking to get a larger loan than your employed income will allow.

What income do mortgage companies look at for self employed?

This will largely depend on if you are a director or a sole trader. We’ll concentrate on getting a sole trader mortgage here as you can find out more about company directors on our limited company directors page. As a sole trader lenders will usually take your net profits as on your SA302 self assessment tax return. You can find out how to get these here – Guide to download your self employed documents

Limited company vs Sole Trader Mortgage

You will have already made the decision whether to be a limited company director or a sole trader based on your situation. They can essentially borrow the same and therefore usually have the same products available to both. It will predominantly be down to your situation whether you have chosen to be a sole trader or a limited company director.

Can you get a Sole Trader Mortgage Calculator?

You can, but it wouldn’t be very accurate. We don’t have a mortgage calculator on the site. If you would like to know how much you can borrow we can tell you over the phone, it will usually take less than 10 minutes. When it comes to calculating how much you can afford it’s more complicated than just saying it’s a certain amount multiplied by your income. If you do want to know how much you can borrow give us a call and we’ll tell you for free.

Can a Sole Trader deduct a mortgage payment?

This is likely a no we’re afraid. Your mortgage isn’t usually a business expense. With anything of this type we would recommend you speak to an Accountant or Tax specialist.

Got a question we didn’t answer? Maybe we answer it on our main Self employed page, if not get in touch!

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