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Author: Carl Shave-Director
Updated on April 18th, 2024

Self-employed mortgages with 1 year’s accounts

When applying for a self-employed mortgage in the past, a person could simply give a statement about their earnings for the lender. This would then be used as a basis for awarding a mortgage. Since that option was removed in 2011, getting a mortgage when you’re self-employed became a little more challenging.

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Regulations require mortgage lenders to establish an applicant’s proof of income. This is to show they are lending responsibly, and that the borrower is able to repay the loan. Some lenders do this by requesting three years’ worth of business accounts. However, this can be a problem if you’ve only been trading for a year.

Fortunately, there are lenders who will be willing to offer a mortgage based on just one year’s accounts. Although you will likely need to shop around and/or talk to a specialist mortgage broker, there will be deals to suit your circumstances available on the market. You just need to know how to find them.

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Can I get a mortgage with 1 year’s accounts?

It is possible to get a mortgage with one year’s accounts.

Lenders willing to consider providing a mortgage will typically ask for a lot more background information than your accounts. They will be interested in the following:

  • How long you have been working in your trade in total prior to being self-employed.
  • Whether previous jobs have been similar to your business now.
  • Your previous income level through that work.

All these and more will play a part in the underwriting process and give a guide to your income ongoing.

If you can give a bigger deposit, lenders will consider the loan-to-value (LTV) ratio to be more important, meaning you may be able to borrow on a more expensive property.

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Fill out our quick and easy Self-employed calculator below. We only require a few details to see how much you may be able to borrow.


Proving my income with 1 year’s accounts

As evidence of your income, mortgage lenders will typically refer to your business accounts. They are also likely to use your SA302 year-end Tax Calculation form (and accompanying breakdown) from HMRC. They will usually need accounts to be prepared by a certified or chartered accountant.

How much can I borrow with 1 year's accounts?

Lenders decide how much you can borrow based on your income, not how long you’ve had accounts.

Once this has been established, lenders will typically lend between 3.5 to 5 times your annual income. A lender will typically be looking for a deposit of at least 10% of the property value. They will also expect a clean credit history from the last six years.

What if I want to borrow more than would generally be offered?

Borrowing more than the usual multiples of annual income might be possible in certain circumstances. If you have an especially high income and can prove your repayment abilities, then it’s possible to increase borrowing.

Another way to increase your borrowing is to show a significant improvement in your business income. An example of this is if you’re into your second year of trading and are having a much better year than previously. You could then use your current figures, before they have been submitted to HMRC, to make a case to boost your borrowing.

For instance, your previous year’s income was £30,000 but you have already hit that sum after only 9 months of the current year. You would then be able to use projected figures, provided by an accountant, as proof of a larger income. This could make the difference between being able to borrow £150,000 (five times £30,000) or £200,000 (5x £40,000). But remember, much will depend on an individual lender’s underwriting policies.

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Can I remortgage with 1 year’s accounts?

As with obtaining a normal mortgage, it can also be possible for a self-employed person to remortgage using just one year’s accounts. A number of lenders have become more flexible in their approach and moved away from the traditional view that self-employed borrowers should have at least two or three years’ worth of accounts in order to be trusted with a mortgage.


Self-employed mortgages using last year’s accounts

As mentioned previously, lenders typically need you to provide 2 or 3-years’ worth of accounts. However, what if you want to prove your income with just last year’s accounts and not consider previous years.

It is possible and works the same as using 1 year’s accounts. If you follow the correct steps and meet the requirements of lenders, there is no reason why you can’t do it.

What if I have just switched to a limited company?

Just because your business has switched trading styles, it doesn’t mean it will stop you. Although, you may need to jump through some extra hoops.

You will need to show that your income up until switching was consistent. As well as showing it’s at an appropriate level for your required mortgage. If the lender agrees, you need to demonstrate that you will continue to earn money from the business. This includes your salary, as well as any dividends or profits that you retain within the business.

Just remember that lenders will expect previous, current, and projected figures. They will expect these to be prepared by a certified or chartered accountant.

Specialist self-employed mortgage advice

At The Mortgage Centres, we understand that not everyone fits the standard mortgage criteria used by most lenders. You are likely to find much better results and more suitable products by talking to a mortgage broker. They will be able to understand your circumstances and know exactly which lenders to approach.

Fortunately, a number of high street lenders are now more open to dealing with self-employed applications. To discover your options and arrange a free consultation, please call our team on 0330 094 5876. Alternatively, get in touch below.


Frequently asked questions...

  • Can I get a mortgage with 1 year's accounts if I have bad credit?
  • Who are the best lenders with 1 year's accounts?

Yes, it’s possible. But much will depend on the nature of the bad credit event, and how long ago it occurred.

A few late payments on credit cards or store cards, even in the last year, might not prejudice the lender against your application. Especially if you show a strong current financial situation.

However, events like defaults or county court judgements (CCJs) within the last two years might affect a lender’s decision.

You might be surprised, but there are now a few high street lenders who offer self-employed mortgages with one year’s accounts. But if you do not meet their criteria, there are a number of specialist mortgage lenders who can help you.

Some examples of specialist mortgage lenders we have used are:

These lenders are all willing to consider applications for mortgages based on one year’s accounts.

Not all mortgage brokers will have access to these specialist lenders, but at The Mortgage Centres we work with all these and others.

Due to our expertise and relationships, we also have access to exclusive products only available through these lenders. As well as trusted access to any new specialist lenders entering the market.

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