Getting a Mortgage with 1 Year’s Accounts for Self-Employed Individuals

Getting a Mortgage with 1 Year’s Accounts for Self-Employed Individuals 

If you’re newly self-employed and thinking about applying for a mortgage, you may have already hit a wall of confusion or misinformation. One of the most common questions I get as an experienced mortgage broker is: “Can I get a mortgage with just one year of accounts?” The answer is: Yes, but only with the right lender, preparation, and strategy.

It is more difficult to obtain a mortgage with only one year’s accounts, but it is achievable with the right approach. Lenders typically need two or three years of accounts to approve a mortgage application from self-employed individuals, making it essential to find the right lender if you have less history.

Self-employed people must provide more evidence of reliable income than traditional employees, which adds to the complexity of the process. Running your own business comes with unique challenges when applying for a mortgage, as lenders will scrutinise your financial records more closely.

For mortgage purposes, you are considered self employed if you own your own business as a sole trader, limited company director, or work as a contractor. Each business type may have slightly different requirements, but all are generally classified as self-employed by lenders.

This article will walk you through the entire process, outline what lenders are looking for, explain how can help. Your employment status as self-employed does not automatically disqualify you from getting a mortgage, but it does affect the documentation you will need to provide.

Can You Get a Mortgage with Just 1 Year’s Accounts?

Most high street lenders require two or more years of accounts, but there is a growing number of both mainstream and specialist lenders that will accept 1 year’s accounts, one year’s accounts, or even just one year’s accounts, provided the rest of your profile is strong.

While most lenders typically require two to three years accounts to prove income when applying for a mortgage, there are options for those with only a year’s worth or years worth of documentation. This means that even with only a year’s worth of accounts, you may still be eligible for a mortgage, though your choices may be more limited.

Lenders are primarily looking for:

• Evidence of consistent and sustainable income

• A clean or reasonably managed credit profile

• Proof that your business is viable, not just a one-off profitable year

• Sufficient deposit and overall affordability

Lenders will look at your annual income, and may borrow based their decision on your most recent year’s worth of accounts, but may also consider your income over the past few years if available.

A clean credit history can put self-employed individuals in a favourable position when applying for a mortgage. However, self-employed individuals are often at a disadvantage compared to those with multiple years of income history. A good credit rating improves the likelihood of mortgage approval for self-employed individuals, as it demonstrates financial reliability to lenders.

Being on the electoral roll can also help improve your credit score, which is another factor lenders consider. Additionally, the interest rate on a mortgage can depend on the borrower’s credit history and deposit size.

For those in self employment, you must provide proof of self employed income, such as main documents like SA302s, tax year overviews, and, for company directors, dividend payments. Some lenders offer the same interest rates to self-employed applicants as to employed ones, provided the money you borrow is supported by strong documentation.

It’s important to understand that lenders assess risk and being newly self-employed is seen as higher risk, even if your income is good. That’s why lender selection is crucial. The main documents required will depend on your self employment structure and the lender’s criteria.

Deposit Requirements: How Much Will You Need?

The size of your deposit can make a big difference when applying for a self employed mortgage. While the minimum deposit required is often similar to that for employed applicants, self employed borrowers may find that a bigger deposit can help offset the perceived risk in the eyes of lenders. Generally, the more you can put down, the better your chances of getting a mortgage with competitive interest rates and terms.

Some specialist lenders are more flexible and may accept smaller deposits, especially if the rest of your application is strong. However, saving for a substantial deposit is always a smart move, as it can reduce your monthly repayments and give you access to a wider range of mortgage deals.

A mortgage broker can help you understand exactly how much deposit you’ll need based on your individual circumstances and connect you with lenders who are most likely to approve your application. If you’re self employed, start planning early and aim to save as much as possible for your deposit—this will put you in a stronger position when it’s time to apply for your mortgage.

Booking Fee and the Application Process

When you apply for a new mortgage deal, you may encounter a booking fee, sometimes called a reservation fee. This is a non-refundable charge, typically ranging from £100 to £300, paid upfront to secure your chosen remortgage deal. The booking fee ensures that your new mortgage deal is reserved while your application is processed.

After paying the booking fee, you’ll need to provide your lender with detailed financial information and supporting documents as part of the application process. A mortgage broker can be invaluable at this stage, helping you gather the right paperwork and avoid common mistakes that could delay your remortgage.

It’s also important to be aware of the lender’s management costs, as these can affect the overall value of your remortgage deal. By understanding all the steps and fees involved, you can move through the application process with confidence and secure the best new mortgage deal for your needs.

The Self-Employed Mortgage Process (With 1 Year’s Accounts)

Let me take you through the process of securing a mortgage with 1 year’s accounts. We offer a free consultation to discuss your options and help you prepare before you apply for a mortgage. While it follows the same basic path as any mortgage application, there are a few extra steps to be mindful of when you’re self-employed.

1. Initial Consultation and Affordability Review

We’ll start by reviewing:

• Your trading structure (sole trader, limited company, or partnership)

• Your net income or salary/dividends if you’re a director

• Deposit available

• Any credit issues or debt

This allows us to understand your borrowing potential and target the most appropriate lenders from the start.

2. Preparing Your Documents

To apply with only one year of trading history, your documents need to be strong and clear:

• Sole Traders: 1 year of SA302 (tax calculation) and tax year overview from HMRC

• Limited Company Directors: 1 year of signed company accounts plus evidence of salary/dividends.

• Contractors: Copy of your contract, bank statements, and a CV if applicable.

• All Applicants: 3–6 months of personal and business bank statements, ID, proof of deposit

Having financial documents prepared in advance can speed up the mortgage application process, ensuring a smoother experience.

Lenders typically require proof of income certified by a registered accountant to ensure the accuracy and reliability of the financial information provided. Additionally, lenders often request additional proof of income beyond tax returns to assess mortgage applications for self-employed individuals, making it crucial to have comprehensive documentation ready.

Consulting a qualified accountant can improve your mortgage application.

Self-employed earnings can only be proven by specific tax documents from HMRC.

Lenders commonly ask for your SA302 year-end Tax Calculation form to assess income.

Some lenders may also request an accountant’s certificate or forecast to support your future income potential.

3. Choosing the Right Lender

This step is where a broker really adds value. Not all lenders treat self-employed applicants equally:

• Some will look at net profit only

• Others use salary and dividends, or even retained profits

• Certain lenders are open to contractor income based on daily or hourly rates

• Lenders will take an average of your income over the last two years if it has changed

Some lenders can take into account a self-employed individual’s company’s profits for their mortgage application.

We will match your situation to a lender with the most suitable criteria not just who will lend, but who will offer the most competitive terms.

4. Agreement in Principle (AIP)

Once we’ve identified the best lender, I’ll apply for an Agreement in Principle. This confirms how much you can borrow and shows estate agents you’re a serious buyer.

5. Full Mortgage Application

Once you’ve found a property and had an offer accepted, we proceed with the full mortgage application. We will handle all the paperwork, liaise with the lender, and manage any underwriting queries on your behalf.

6. Valuation and Offer

The lender will arrange a property valuation. If all checks out, they’ll issue a formal mortgage offer. From here, you instruct your solicitor and move toward exchange and completion.

Interest Rates and Fees: What to Expect

Interest rates and fees for self employed mortgages can sometimes be higher than those for employed applicants, simply because lenders see self employed borrowers as a higher risk.

However, this doesn’t mean you can’t find a good deal, especially if you work with a specialist mortgage broker who understands the market and knows which lenders offer the best rates for self employed applicants.

When comparing mortgage deals, pay close attention to the interest rate, but also look at the annual percentage rate (APR), arrangement fees, and any early repayment charges. If you have a good credit score and a healthy deposit, you’ll be in a stronger position to negotiate better interest rates and lower fees.

If your credit history is less than perfect or your deposit is on the smaller side, you may face higher interest rates. That’s why it’s so important to get your finances in order before applying for a mortgage.

A specialist mortgage broker can help you compare deals, understand the true cost of each mortgage, and find the most competitive option for your situation.

Why Using a Broker is Crucial with One Year’s Accounts

When you only have 12 months of trading history, your mortgage application is far from straightforward. Here’s how we help:

1. Access to Specialist Lenders

Some lenders who accept 1-year self-employed applicants only deal with brokers. This includes lenders like Aldermore, Bluestone, and Kensington.

2. Expert Packaging of Your Case

Lenders will scrutinise your income and business viability. We ensure your case is presented clearly and strongly, with supporting documentation laid out properly.

3. Avoiding Rejection

Applying to the wrong lender and getting declined can damage your credit file and reduce future options.

4. Saving Time and Stress

With our experience, we know which lenders are quick, responsive, and easy to work with and which ones drag their heels. That matters when you’re on a deadline.

Which Lenders Accept One Year of Accounts?

When searching for a mortgage as a self-employed individual, it’s important to know that some mortgage lenders are willing to consider applicants with only one year of accounts, while others require multiple years accounts to assess eligibility.

The number of years accounts you can provide often impacts your borrowing options and the range of lenders available.

Here’s a snapshot of lenders who may approve applicants with only one full year of trading:

Criteria vary depending on LTV, credit score, and income structure. Always consult a broker to confirm current lender positions.

Pros and Cons of Applying with One Year’s Accounts

Pros:

• Get on the property ladder sooner without waiting another year

• Access specialist lenders that are flexible with income types

• Potential to lock in a deal before interest rates rise

• Build equity and credit history sooner

Cons:

• Limited choice of lenders

• Potentially higher interest rates

• Stricter underwriting and more documents needed

• Greater reliance on strong credit score and deposit size

A larger deposit may help mitigate the risk for lenders and could lead to better interest rates for self-employed applicants. This is because a larger deposit reduces the amount you need to borrow, which can positively influence the mortgage rate offered by lenders.

The larger the deposit towards your house purchase, the less you’ll need to borrow through your mortgage. However, you won’t be required to put down a larger deposit if you only have one year’s worth of business accounts.

Long-Term Planning for Self-Employed Homeowners

Securing a self employed mortgage is just the first step long-term planning is key to making sure you can comfortably afford your mortgage repayments for years to come. As a self employed homeowner, it’s important to regularly review your business performance, future earnings potential, and overall financial stability.

Work with a qualified accountant to create a robust financial plan that takes into account your business’s ups and downs, as well as any changes in your personal circumstances. Keep an eye on interest rates and be prepared to remortgage or switch deals if a better option becomes available.

A specialist mortgage broker can provide ongoing support, helping you review your mortgage as your business grows and your needs change. By planning ahead and staying proactive, you’ll be well-positioned to manage your repayments, protect your home, and achieve your long-term financial goals as a self employed homeowner.

Final Thoughts: Yes, It’s Possible With the Right Support

Getting a mortgage when you’ve only been self-employed for a year is not only possible it’s something we’ve helped many clients achieve. Whether you’re a graphic designer, builder, freelancer, or limited company director, there are lenders out there who are ready to work with you. The key is preparation, guidance, and picking the right lender.

Get help from an experienced mortgage broker.

You can speak to one of our specialist mortgage brokers who would be able to guide you through the process. They will advise if there is a lender available and the maximum loan amount based on your circumstances. We are a whole of market mortgage brokerage with access to all lenders. Call us on 01332 470400 or complete the form with your details for us to give you a call back.

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