Remortgaging when your self-employed follows the same rules as getting a mortgage as a self-employed person in the first place. Being able to prove your income and speaking to a specialist mortgage adviser is a great place to start. This guide covers everything self-employed homeowners need to know about remortgaging, from how lenders verify income for sole traders, contractors and company directors, to the requirements and rates you can expect. It also explains how a mortgage broker can help you find lenders who understand your income, so you can prepare with confidence and find a deal that fits your circumstances.
“Being self-employed shouldn’t stand between you and a great remortgage deal. The key is understanding how lenders assess your income, having the right paperwork ready and knowing which lenders are best suited to your circumstances. Every lender takes a different approach, but with expert guidance, you can navigate the options with confidence. At Mab, we regularly help self-employed borrowers secure competitive deals, so don’t count yourself out before you’ve explored what’s possible.”
Rachel Geddes
Strategic Lender Relationship Director
What is a self-employed remortgage?
Remortgaging can feel a little daunting when your income doesn't arrive in the same neat monthly package as a salary. But being self-employed doesn’t mean you should settle for a rubbish mortgage.
The important thing is not to rule yourself out before you've checked your options and make sure you’re getting the best advice.
What is remortgaging?
Remortgaging means switching your current mortgage to a new deal. People usually do this when the term of their current mortgage deal comes to an end.
You do this either by:
Switching to a new lender
Choosing a new mortgage product with your current lender
Remortgaging often means you can:
Get a better interest rate
Change your loan terms
Borrow extra money
Can I remortgage if I am self-employed?
Yes, you can. The remortgage process is pretty much the same as it is for other homeowners. The main difference is that lenders may ask for a little more information to check your income.
Understanding self-employed income verification
The words 'income verification' might send a slight shiver down your spine, but it just means showing a lender how much you earn and how reliable that income is.
It can involve a bit more paperwork than proving a salary with payslips, but it is something self-employed mortgage lenders deal with every day.
How do lenders assess self-employed income?
This is often a cause for concern for self-employed homeowners, but lenders are used to assessing different types of income and business structures, so chances are they’ve seen a situation like yours before.
There is no single way that lenders work out self-employed income. Different self-employed mortgage lenders have different rules They may look at:
Your business accounts
SA302 forms or tax year overviews
Salary and dividends
Your share of company profits
Bank statements
Your business history
Contracts or regular work
The way your income is assessed can also depend on how you work.
Sole traders
Lenders may look at your net profit rather than your turnover. Some may use your latest year's profit, while others may take an average over two or three years.
Limited company directors
A lender may look at your salary and dividends. Some will also consider your share of the company's net profit.
This is why two lenders can look at the same set of accounts and offer different amounts.
Contractors and freelancers
If you work on contracts, a lender may look at your contract rate, length of contract and history of work. Some lenders are more comfortable with this type of income than others.
If you’re uncertain about any of this, speaking to one of our specialist self-employed mortgage brokers can answer your questions and search for appropriate deals.
How far back will they go?
Many lenders ask for two or three years of accounts or tax records, but some will consider applicants with just one year’s accounts. You’ll also need to meet the lender’s usual affordability and credit checks.
If your income goes up and down, don’t assume you’ll struggle to remortgage, this is a characteristic of being self-employed. The key is showing that your income is reliable enough to support the remortgage.
When should you remortgage?
You don't need to wait until your current deal ends before looking. We usually recommend you begin speaking with a mortgage adviser around six months before the end of your current deal. Starting early gives you time to get your paperwork together and sort out any questions about your income.
Check:
When your current deal ends
Your outstanding mortgage balance
Your current interest rate
Whether you have an early repayment charge
Your home's current value
Your loan-to-value (LTV)
Whether you want to borrow more
Use our Mortgage Borrowing Calculator to help you work out how much you might be able to borrow.
Getting ready to remortgage when you're self-employed
Understanding the self-employed mortgage requirements that lenders look for is the first step. The good news is that the basics are pretty similar as for any other borrower. You need to show that you can afford the mortgage and have a good enough credit history.
Here's how to get everything ready.
Keep your finances in order
Make sure your accounts and tax records are up to date. Keep a clear record of your income and business expenses.
This makes it easier to provide the information a lender asks for.
Check your credit report
Your credit history is a detailed record of how you borrow and repay money. Your credit score is a figure calculated from that history. Lenders will look at this, alongside your income and outgoings, and assess how safe you are to lend to. A good credit score can help you access more deals.
Check your credit history for errors. To maintain a good credit score, keep up with bills and repayments and avoid taking on unnecessary new debt.
Show evidence of work coming along in the future
If your income varies, evidence of upcoming work can help show lenders that your income is likely to continue. This could include:
Signed contracts
Upcoming projects
Regular clients
Long-term agreements
Repeat business
Give yourself some breathing room
Don’t borrow more than you can comfortably afford. Leave some room for quieter periods, higher costs and unexpected bills, it’ll probably help you sleep a little better at night too!
If you want to borrow more when you remortgage, a broker can help you understand what may be affordable.
Working with a self-employed mortgage broker
This is where we come in. A mortgage broker can save you time by checking which lenders are most likely to accept your income and circumstances, rather than you having to trail around and speak to them one by one.
How can a mortgage broker help?
A mortgage broker can take some of the legwork out of remortgaging and be a sounding board for any of your worries. They can:
Review your income and finances
Explain which documents you need
Check lender criteria
Compare suitable mortgage deals
Explain your borrowing options
Help with your application
Choosing the right broker
Finding a mortgage broker with experience of helping self-employed borrowers remortgage is key. They should understand how different lenders assess income and be able to explain your options.
Speaking to one of our specialist mortgage advisers is a great first step. They’ll explain everything in plain English and help you through the entire process.
Common misconceptions about brokers
You don't need to have complicated finances to use a mortgage broker. Self-employed homeowners can benefit from advice too, particularly when lenders have different rules for assessing income.
Using a broker may also save you a bit of money. Even if you pay a broker fee, finding a more competitive mortgage deal could save you more over the life of the mortgage than the cost of the advice.
Next steps in the remortgage process
If your current mortgage deal is six months away from expiring or less, now ‘s the time to get in touch to find a great deal.
Start by checking your mortgage end date and outstanding balance. Then get your accounts, tax records and other financial documents in order.
Next, speak to a mortgage broker. They can assess your circumstances, explain your options and search for suitable self-employed mortgage lenders.
Getting advice early gives you time to deal with any issues and puts you in a stronger position when it's time to switch.
Something to bear in mind...
Frequently asked questions
Not necessarily. You may need to provide more evidence of your income, but many lenders accept applications from self-employed borrowers. The key is finding one whose criteria fit your circumstances.
There's no single rule. Many lenders want two or three years of accounts or tax records, but some will consider borrowers with just one year of self-employed income.
Yes, potentially. Lenders understand that self-employed income can vary. They will look at your income history and overall finances to decide how much you can afford.
Yes, if a lender is willing to offer the extra borrowing and you can afford it. Remember that releasing money from your home increases your mortgage debt and may increase your monthly payments.
A mortgage broker can be especially helpful if you're self-employed. A broker can compare lenders and help you find one that's comfortable with your type of income and circumstances.