Mortgages for Business Owners and Contractors

Business owners and contractors may find it challenging to secure mortgage, and the reasons include their lack of a pay slip that could be put against their loan application. Different institutions make it mandatory to prove you are employed before you are approved for a mortgage, but some of them are realizing the huge potential that lay hidden in self-employed people and contractors.

If you are among self-employed, you can still secure a mortgage through these procedures. You can also read more about self-employed mortgages here.

Self-employed mortgage

Mortgage for Self-employed

You are classed as self-employed if you run or own a certain percentage of a business, in most cases 20% to 25%. Self-employed people are required to prove their income before they are considered for a mortgage. You can do this by declaring your business accounts or through an accountant’s reference, and this should be prepared by a certified accountant. You will share information with a ledger highlighting at least three years’ income, although some lenders will accept proof of income spanning a year.

The lender will assess your potential using the profits you have gained over the specified period and the trends highlighted that show your growth. This step is important as it helps to determine if in coming years you will be in a position to raise the declared amount to service the loan.

It sometimes gets challenging to establish how much you should get because business many not pay a consistent amount throughout. The challenge is not always in determining if you should be given the loan, but in deciding how much you deserve based on the fluctuating income your business earns you.

Specialist Lenders

To make the process of borrowing a mortgage when self-employed easy, you could consider working with specialist lenders who specialize in lending to self-employed individuals and contractors. These will much easily understand your case and could help you secure the loan faster.

Mainstream mortgages might come with some bottlenecks if you are self-employed because their service is designed mainly to serve those who are employed. However, specialist lenders are somewhat expensive, so before you opt for their service, confirm if there are mainstream lenders who can give you a good deal.

Mortgage loan officer advising clients

How Much Can you Borrow?

Lenders have departed from the simple procedures they used in the past to determine the amount you qualify for. They factor in a few things including your current expenditure and income levels from few years in the past to date. This helps them to evaluate the maximum amount you qualify to get.

If you have regular contracts, the lender may get the confidence to lend you with no problems, and don’t forget if you have debts they will also influence how much you will be awarded, so make sure to reduce debts before you apply for mortgage.


Applying for mortgage when self-employed comes with some challenges partly because you don’t have a regular pay slip to put against your borrowing. Lenders use several factors to determine what you can get including the profits your company has made in a specified period of time. You will be required to prove your income and show that you are in a position to raise the required amount in the future.