Getting a mortgage is rarely simple — and it can feel even more complicated when you’re self-employed, a contractor, or a freelancer with variable income.
The truth is, you don’t need a 9-to-5 job to get approved. You just need to know how lenders view your income and what documentation they’ll ask for.
Here’s how to prepare, which lenders are most flexible, and how Mortgage Knight can help you get your mortgage approved first time.
How Lenders Assess Self-Employed Income
Most lenders look for two years of trading history and use your average profit or salary/dividends to calculate affordability.
However, several lenders — such as Halifax, HSBC, and Metro Bank — can consider just one year of accounts if your income is stable or growing.
Documents you’ll likely need:
- Latest SA302s and Tax Year Overviews
- Business accounts prepared by an accountant
- Three months’ bank statements showing regular income
If you work as a Limited Company Director, lenders may use your salary plus dividends — but some will consider retained profits too, which can significantly boost borrowing potential.
Contractor Mortgages — Income Based on Your Day Rate
Contractors, especially in IT, construction, and healthcare, can benefit from contract-based underwriting.
Instead of using tax returns, certain lenders calculate income using your day rate multiplied by a set number of weeks (often 46–48).
For example:
£400 per day × 5 days × 46 weeks = £92,000 annualised income.
This approach can increase borrowing power substantially compared to standard self-employed assessments.
Lenders such as Clydesdale Bank, Halifax, and Kensington Mortgages often cater to day-rate contractors, including those paid in foreign currencies.
Freelancers and Locums — Proving Consistent Income
Freelancers and locums with multiple income streams often fear rejection, but many lenders now accept averages across different contracts.
Providing invoices, bank statements, and recent contracts can be enough to prove stable earnings.
For medical locums, Mortgage Knight works with lenders who average your most recent three months of income — ideal for those with short-term NHS contracts or private assignments.
Common Myths About Self-Employed Mortgages
Let’s clear up a few misconceptions:
❌ You need three years of accounts — not true; some lenders accept one year.
❌ You can’t get a mortgage if you’ve had a quiet period — many lenders accept fluctuations if income is trending upward.
❌ Rates are higher for self-employed borrowers — not necessarily; strong applications can access the same deals as employed clients.
How a Broker Makes the Difference
Each lender interprets self-employed income differently. Applying to the wrong one first could lead to rejection and harm your credit file.
Mortgage Knight advisers specialise in non-standard income — meaning we already know which lenders match your profile.
We can help you:
- Identify lenders that accept your specific employment setup.
- Present your income correctly to maximise borrowing.
- Avoid delays and rejections due to misunderstanding your business model.
Case Studies
Case Study 1: Daniel – IT Contractor
Daniel worked through a limited company and had just one year of accounts. Mortgage Knight used his day-rate income to secure a mortgage with Clydesdale Bank, boosting borrowing capacity from £250k to £350k.
Case Study 2: Priya – Self-Employed Hairdresser
Priya’s earnings fluctuated due to maternity leave. Mortgage Knight found a lender that used her latest year’s profit, recognising her return to full-time work, allowing her to buy a £220,000 home.
Case Study 3: Ben – NHS Locum Doctor
With multiple short-term contracts, Ben struggled to prove stable income. We averaged his last three months’ payslips, securing approval with Halifax at a competitive fixed rate.
Frequently Asked Questions
Q1. Can I get a mortgage with only one year of self-employed accounts?
Ans: Yes — several lenders accept one year of accounts if you’ve been in the same industry or can show consistent income.
Q2. How do lenders calculate contractor income?
Ans: Most use your day rate multiplied by 46–48 weeks to estimate annual income.
Q3. Will I pay a higher rate if I’m self-employed?
Ans: Not necessarily. With the right documentation and broker support, you can access mainstream rates.
Q4. What if I’ve recently switched from PAYE to self-employed?
Ans: If your new role is in the same industry, some lenders will still consider your application — even with limited trading history.
Q5. Can I use retained profits to increase my borrowing?
Ans:Yes, a few specialist lenders include retained profits alongside salary and dividends — Mortgage Knight can identify them for you.
Professional Contractor Mortgage Guidance
If you’re a contractor looking for professional mortgage guidance, we’re here to help. Our specialist knowledge and lender relationships enable us to provide expert advice tailored to your situation.
You don’t need a traditional job to get a great mortgage.
Whether you’re self-employed, a contractor, or a freelancer, Mortgage Knight can help you find lenders who understand your income and approve your application quickly.
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