If you are self-employed, the amount you can borrow varies dramatically between lenders on the same set of accounts. This is not because some lenders are being awkward — it is because they define “income” differently. Understanding those definitions is the difference between a £180,000 mortgage and a £280,000 one on identical numbers.

The problem with the high street

Most high-street lenders use a tickbox affordability calculation designed for salaried employees. When they try to apply it to self-employed applicants, they usually take the most conservative interpretation possible: the lowest of the last two or three years of income, ignoring anything that looks unusual.

Specialist lenders (which we access through PRIMIS as a whole-of-market broker) are set up differently. They will consider:

  • The trend across the last three years, not just the lowest year.
  • One year of accounts, not two or three.
  • Retained profits in the company, not just what you pay yourself.
  • Day rate x working days for contractors, not payslip income.
  • Projections and forecasts for the current year, in the right circumstances.

Sole traders (self-assessment)

Lenders typically use one of these approaches:

  • Latest year of net profit from your SA302 tax calculation.
  • Average of last two years of net profit.
  • Average of last three years, with the most recent year weighted higher if it is trending up.

If your income is stable or rising, you want a lender that uses the latest year. If your income spikes then falls, you want a lender that averages. We match you to the lender whose calculation gives you the best answer on your specific accounts.

Limited company directors

This is where the biggest gap opens between lenders:

  • Salary + dividends only (most high-street lenders): if you pay yourself £12,000 salary and £30,000 dividends, they use £42,000.
  • Salary + share of net profit (many specialist lenders): if your company’s share of net profit before dividends was £90,000 and you own 100% of it, they use £12,000 + £90,000 = £102,000.

On £42,000 you borrow around £190,000. On £102,000 you borrow around £460,000. Same accounts, same person, more than double the mortgage.

If you leave profit in the company for tax reasons (which most sensibly-advised limited company directors do), a lender that uses share of net profit is transformative.

Day-rate contractors

Specialist contractor lenders assess you on:

Day rate × 5 working days × 46 working weeks = annualised income

So on a £450 day rate, they treat you as earning £103,500 annually — regardless of what you actually pay yourself as salary. This usually gives contractors access to substantially larger mortgages than they would get on payslip income alone.

You typically need to be at least 6-12 months into a rolling contract, or on a contract with 3+ months remaining.

What we need on the first call

To give you an accurate borrowing figure we usually need:

  • Last 2-3 years of SA302 tax calculations (sole traders) or company accounts (limited company).
  • Corresponding tax year overviews from HMRC.
  • For contractors: a copy of your current contract.
  • An idea of your other income, dependants, and existing credit commitments.

Talk to Anth

Self-employed cases are where whole-of-market advice really pays. On the first call we identify which lender treats your income structure most favourably and how much you can realistically borrow. Book a call.