Getting a Self-Employed Mortgage without Accounts
Self-employed and looking for a mortgage but don’t have any accounts? Read our in-depth guide for everything you need to know.
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Author: Pete Mugleston - Mortgage Expert, MD
Updated: December 13, 2021
If you’ve only recently become self-employed and have less than 2-3 years’ accounts, work on a contract basis or freelance with fluctuating income streams, getting a mortgage can be very difficult but it’s definitely not impossible.
By following the steps outlined in this guide you’ll have a much clearer understanding of how it’s possible to get a mortgage without any substantial proof of income, finding lenders that can help and what additional information or evidence they’ll be looking for.
The following topics are covered below...
Can you get a mortgage with no proof of income?
Not anymore, but close alternatives and fall-back options do exist in the form of flexible mortgage lenders and mortgage brokers who specialise in customers with complex income and no way to formally evidence it.
Prior to 2014, if you were self employed but unable to provide any proof of income, you could do this yourself through what were known as ‘self-certification’ mortgages. As the name suggests, an applicant basically confirmed their own ability to make the repayments.
As a result of the financial crash that began in 2007, these types of mortgages were stopped by the Financial Conduct Authority (FCA), as too many people were being approved for mortgages who were unable to repay the loans.
The good news is there’s still a number of alternative lenders who have now stepped into the space left open by the absence of self-certification mortgages, with the experience and knowledge of dealing with a range of different circumstances, such as:
- Self-employed and not yet reached a full years trading
- Accounts show a financial loss or a downward trend in profits
- Working on a contractor basis
- Business owners with a bad credit record
Nowadays, the best way forward, if you’re unable to provide any proof of income, or if you think other issues might hamper your chances of getting approved, speak with your mortgage broker and ask them to help identify lenders who can deal with these situations.
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How to get a self-employed mortgage with no accounts
When an employee applies for a mortgage, there’s a whole host of readily available documents they can produce as proof of their income; monthly payslips, P60s, employment contract and even a reference from their employer, if required.
If you’re self-employed with multiple years’ full trading under your belt, most lenders will ask for certified business accounts and/or SA302 statements from HMRC for the most recent three-year period as evidence of earnings.
As long as these documents show a healthy, consistent profit your application stands a good chance of being successful.
For self-employed people who only have one or two years worth of certified accounts it becomes more difficult and usually involves providing lenders with future income projections in order to convince them you can afford the repayments.
What if you haven’t finished your first year of trading?
If you’ve only recently become self-employed and haven’t yet completed a full year of trading, you simply don’t have access to any of the documents mentioned above.
This is why, without any of this evidence available, most lenders won’t consider your application.
The good news is a finite number of specialist lenders do exist who will look at applications from people in these types of situations. There’s a number of steps we recommend you take before getting to this point.
1. Save us as much deposit as possible
The more deposit you can save, the better your chances are of more lenders willing to consider your application.
Higher deposits naturally mean you won’t have to borrow as much, which could make a real difference when a lender balances this up against their overall eligibility criteria.
A large deposit could take time to build up so, start saving as much as you can, when you can!
2. Speak to an experienced mortgage broker
Rather than try and apply directly with a lender, the smart move is to approach an experienced mortgage broker first and ask for their help.
If you’re newly self-employed with no accounts you already know your application is going to need a lot of additional information if it’s to be successful.
An experienced broker will know exactly what supporting evidence is required.
Our advisor-matching service is designed to select the right advisor with the best experience to help with your specific circumstances.
If you get in touch we can arrange for a mortgage broker to contact you who has dealt with situations such as this previously.
3. Prepare future income projections
If you haven’t completed a full trading year yet, you can’t provide any certified accounts but you can employ an accountant to produce a projection for you, based on the income you’ve generated so far and any existing contracts that have already been agreed.
A bona fide income projection will give a lender more confidence in its validity. This isn’t something you should try and do yourself on a spreadsheet – it needs to come from an accountant.
4. Keep a check on your credit score
Taking steps to make sure your credit history has a clean bill of health is something everyone should do, regardless of your employment status. A strong credit score will add a lot of credence to your mortgage application.
Websites such as Clearscore and Experian can send you regular credit reports, usually, on a fee-free basis.
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Proof of income for freelance and contractors
If you’re a freelance or contract worker, whether working under an umbrella arrangement or not, for proof of income you’ll need to provide all the contract details from at least the last 6-12 months.
These documents need to show the amount you’ve been paid, the rates which were applied and whether they’re for a set period of time or on a rolling contract basis.
Evidencing your income from previous employment
It’s quite normal for the early stages of a business to experience high fluctuations in income and outgoings. So, the projections you produce for your first year may not be particularly compelling.
If this is the case, you can also include the income from your most recent employment record to bolster your chances. This could be particularly relevant if you’re still in the same profession but have simply changed your employment status.
In addition to your previous employment record, ask your bank for copies of your business account statements showing all the income generated so far and your outgoings. It’s likely a lender will ask to see these anyway, so best to have them in hand.
You can also ask for copies of the last 6-12 months bank statements from your personal account to evidence any other income streams such as from buy-to-let properties you may own or from your previous employment.
Can you remortgage without any proof of income?
The application process for remortgaging doesn’t really stray far from the one used for a new mortgage and will definitely include an affordability assessment.
Without any proof of income it’s highly unlikely that remortgaging would be possible even with an existing lender.
Having some evidence or projections, as outlined above, will at the very least give your lender something for them to base a decision on, which is why it’s recommended to prepare as much information as you can as proof of your income streams.
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With both my wife and I being Directors of our three year old Ltd company we were struggling with mortgage options even though we could demonstrate enough income.
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Get matched with a broker who specialises in self-employed mortgages
Getting a mortgage when you’re self-employed with no accounts is very difficult. Trying to do it on your own, with no help or guidance makes it even harder. This is where we can help.
The advisors we work with have a rich and varied skill-set and can bring in-depth experience and knowledge to a range of different scenarios, including circumstances such as this.
They can make a tough process much more straightforward.
If you get in touch we can arrange for a mortgage broker to speak with you who has previous experience of helping people in the exact same situation.
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Mortgage Expert, MD
About the author
Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.
Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!