Remortgaging When Self Employed – Everything You Need to Know

Remortgaging When Self Employed – Everything You Need to Know

Remortgaging is a smart financial step for many homeowners. Whether your current mortgage deal is ending, you want to reduce your monthly repayments, or you’d like to release equity from your home, switching to a new mortgage can save you money or give you greater financial flexibility.

For self-employed individuals, being your own boss offers independence and control over your business, but it can also make the remortgaging process more complex, as lenders may view your income differently.

If you’re self-employed, however, remortgaging requires a slightly different approach. Lenders need more evidence of your income and may assess affordability differently than they would for someone on a salary.

In this guide, we’ll walk you through:

• How remortgaging works if you’re self-employed
• What documents you’ll need
• How lenders assess self-employed income
• Which lenders offer the most flexibility
• And how to improve your chances of success

What is a Remortgage?

A remortgage is when you replace your existing mortgage with a new one either with your existing lender (called a product transfer) or by switching to a new lender. Remortgaging means you are refinancing the same property, not moving home. People remortgage for a variety of reasons:

• To get a better interest rate
• To release equity from their home
• To change the mortgage term or type
• To consolidate debts

When your current mortgage deal ends, you are automatically transferred to your lender’s standard variable rate (SVR), which is a type of variable rate. The SVR can fluctuate and is often less favorable than your previous deal, so it’s important to consider remortgaging before being moved to the lender’s standard variable rate.

For self-employed borrowers, a remortgage follows the same general process, but lenders will require more information about your income and business.

When Are You Classed as Self-Employed by Lenders?

This is one of the most misunderstood areas of mortgage lending.

Most lenders define you as self-employed if:

• You own 25% or more of a business (this includes sole traders, company directors, and business partners).
• You work as a contractor, contract worker, freelancer, or consultant and receive income not paid via PAYE.
• Your income is linked to business profits or dividends rather than a set salary.

If you own 25% or less of a limited company, some high street lenders will class you as employed. This means you’ll be assessed based on:

• Your payslips (typically last 3 months)
• Your P60 (end-of-year PAYE summary)

This classification has a significant impact on what documents you’ll need and which lenders are most appropriate. Self employed professionals, including newly self employed people, may face different documentation requirements depending on their business structure and how long they have been trading.

Lenders That May Class You as Employed (If You Own <25% of a Company):

• Halifax
• Nationwide
• HSBC
• Santander
• Barclays

If you own more than 25%, you’ll be considered self-employed and will usually need to provide:

• 1–3 years of SA302s and Tax Year Overviews from HMRC
• Or certified accounts signed off by a qualified accountant

Understanding this rule is essential when preparing your remortgage application.

How the Self-Employed Remortgage Process Works

Step 1: Review Your Current Mortgage

Check when your current deal ends and review your mortgage terms carefully, including whether any early repayment charge (ERC) or other remortgaging costs apply. Most fixed-rate deals last 2 or 5 years remortgaging before expiry could result in penalties, so timing matters.

If you switch to a new lender before your current deal finishes, you may have to pay an early repayment charge. Make sure to weigh these costs against any potential savings from remortgaging.

Step 2: Review Your Finances

Lenders will assess your income, outgoings, credit history, and your property’s value. Showing consistent earnings is important, as lenders look for reliable income streams to ensure financial stability.

It helps to check your credit score and gather your latest financial records. Providing evidence of consistent earnings and a stable work history can help demonstrate stability to lenders during the remortgage process.

Step 3: Gather Documentation

As a self-employed borrower, you’ll typically need:

• 1–3 years of SA302s and Tax Year Overviews
• Certified business accounts (especially for company directors)
• Business and personal bank statements (last 3–6 months)
• ID and proof of address
• Business contracts or future work pipeline (optional but helpful)
• Tax calculations

You may also need to provide proof of ongoing clients or future contracts to demonstrate consistent or upcoming income and support your application.

Step 4: Speak to a Mortgage Broker

A specialist broker will assess your circumstances and identify the lenders best suited to your profile. This is especially helpful if you’re newly self-employed, have complex income, or need a higher loan-to-value (LTV).

Step 5: Submit Application and Valuation

Once your mortgage application is submitted, the lender will review your documents and arrange a property valuation. This determines your LTV and whether the property is acceptable security for the loan.

Step 6: Offer and Completion

If everything is in order, the lender issues a formal offer. The legal work is completed, your current mortgage is paid off, and the new one begins.

When getting a mortgage compared to other types of finance, it’s important to know that mortgage lenders have different requirements for self-employed applicants. The documents accepted by one lender may not be enough for another, as each lender has their own criteria and may request additional evidence depending on your situation.

Understanding Your Credit Score and History as a Self Employed Applicant

When you’re a self employed individual looking to remortgage, your credit score and credit history play a crucial role in the outcome of your self employed remortgage application. Lenders use your credit report to assess your financial situation, including your income and financial stability, before deciding whether to offer you a new mortgage deal.

A good credit score can open the door to more favourable remortgage terms, lower interest rates, and the chance to potentially save money on your monthly repayments.

As a self employed person, it’s especially important to maintain a healthy credit history. Lenders want to see that you make timely repayments on your existing credit commitments, such as credit cards, loans, and your current mortgage.

Regularly checking your credit report allows you to spot any errors or areas for improvement, giving you the opportunity to address issues before you apply.

To strengthen your self employed remortgage application, consider these steps:

• Make all payments on time – missed or late payments can negatively impact your credit score.
• Keep your credit utilisation low – using a smaller percentage of your available credit can help boost your score.
• Avoid taking on new debt before applying, as this can affect your affordability assessment.
• Check your credit report with all major agencies and correct any inaccuracies.

Lenders will also want to see evidence of your income and financial stability. This means providing up-to-date tax returns, business and personal bank statements, and other financial documents that demonstrate predictable cash flow and a stable income.

If you can show ongoing or retained clients, signed contracts, or a clear growth strategy, you’ll further reassure lenders of your ability to keep up with mortgage repayments.

Working with a specialist mortgage broker can be invaluable for self employed individuals. A broker understands the self employed remortgage market and can help you find lenders who are more flexible with self employed people, especially if you’re newly self employed or have a complex income structure.

They can also advise you on how your credit score and financial records will impact your loan to value and the remortgage deals available to you.

In summary, understanding and managing your credit score and history is essential for a successful self employed remortgage. By keeping your credit record healthy, providing clear proof of income and financial stability, and seeking expert advice, you can improve your chances of securing a favourable remortgage deal and potentially save money on your mortgage repayments.

High Street Lenders – Self-Employed Criteria

Some self-employed applicants may also find it easier to remortgage with their existing lender, especially if they have a good repayment history but only limited trading accounts.

Specialist Lenders for Self-Employed Borrowers

Specialist lenders offer tailored solutions for those with:

• Less than 2 years of trading
• Irregular income or seasonality
• Company directors paid via dividends
• Adverse credit or missed payments
• Contractors or freelance income streams

Specialist mortgage lenders may have different criteria for self employment compared to other lenders, making it possible for self-employed individuals to access remortgage options even if they do not meet the requirements of mainstream banks.

Each mortgage lender has its own approach to assessing self-employed applicants, so requirements for self employment may vary between lenders. Some other lenders may be more flexible with documentation or income verification than traditional banks.

Expert Tips to Boost Your Approval Chances

• File your tax returns early to show the most up-to-date income.
• Use an accountant to prepare professional, certified accounts.
• Keep clean financial records, and separate business/personal transactions.
• Explain fluctuations in income clearly with supporting evidence.
• Check your credit file before applying and fix any issues in advance.
• Reduce debt where possible to improve your debt-to-income ratio.

Remortgaging is Possible When You’re Self-Employed

Being self-employed may add a few extra steps to the remortgaging process, but it’s absolutely achievable. Whether you’ve just completed your first trading year or you’ve been running your business for a decade, there are lenders that understand self-employed income and offer competitive rates.

Understanding the current mortgage market can help self-employed individuals find the best remortgage deals and make informed decisions.

The key is knowing where you stand, preparing your documents in advance, and working with a broker who specialises in self-employed mortgages.

Speak to a Specialist Mortgage Broker Today

Need help finding the right remortgage for debt consolidation?

Our team of experienced, whole-of-market mortgage brokers can:

• Assess your debt-to-income ratio
• Compare lenders that accept your circumstances
• Help reduce monthly payments and simplify your finances

Call us on 01332 470400 or complete our online enquiry form to request a free callback and mortgage quote

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