Getting a Home Loan as a Freelancer
TL;DR:
- You need at least two years of tax returns to prove your income
- Solid financial records and a healthy savings account help show stability
- Some lenders specialise in self-employed mortgages and understand freelancer income
- Keep copies of ongoing contracts to demonstrate future work pipeline
- Clean bookkeeping makes the whole process much smoother
Getting a mortgage when you're freelancing comes with extra hoops to jump through. Lenders see self-employed income as riskier than a traditional salary, so they want more proof that you can keep up with payments.
The good news is that plenty of freelancers get mortgages. You just need to be organised and know what lenders are looking for.
What Documents You'll Need
Mortgage applications for freelancers require more paperwork than standard applications. Here's what most lenders will ask for:
Tax returns are non-negotiable. You'll need at least two years, sometimes three. These show your actual declared income, not what you invoiced.
Bank statements going back 3-6 months prove the money is actually coming in. Lenders want to see regular deposits that match your declared income.
Proof of ongoing work helps demonstrate future income. This means contracts, letters of intent from clients, or evidence of regular retainer agreements.
SA302 forms from HMRC provide an official summary of your tax calculations. You can download these from your Government Gateway account.
Accountant's certificate might be required if your income is complex. Some lenders accept a letter from your accountant confirming your average earnings.
Showing Income Stability
The biggest challenge freelancers face is proving their income is reliable. Here's how to make your case stronger:
Keep immaculate records from day one. Use accounting software like FreeAgent or Xero to track everything automatically. Clean books show lenders you're professional and organised.
Build up your savings account. A healthy deposit and several months of mortgage payments in reserve demonstrates financial stability. Aim for at least three months of expenses saved up.
Smooth out income fluctuations by averaging earnings over time. If you earned £30k one year and £50k the next, lenders will typically use an average or focus on the lower figure.
Document regular clients and repeat work. Long-term contracts or evidence of ongoing relationships with clients helps prove your income isn't just one-off projects.
Consider timing your application carefully. Apply after filing tax returns that show strong, consistent income rather than during a quiet period.
Finding the Right Lender
Not all lenders understand freelancer income. Some are much more flexible than others.
Specialist self-employed lenders often have more realistic criteria. They understand that freelancer income naturally varies and don't automatically see this as high risk.
Building societies sometimes take a more personal approach than big banks. They might consider your overall financial picture rather than just ticking boxes.
Mortgage brokers who specialise in self-employed clients know which lenders are most likely to say yes. They can save you time and potentially find better deals.
High street banks aren't impossible, but they often have stricter criteria. If you've banked with them for years and have a good relationship, that can help.
Get your paperwork perfect before approaching anyone. One strong application is better than multiple messy ones that get rejected.
FAQs
How long do I need to be freelancing before I can get a mortgage?
Most lenders want to see at least two years of trading history and tax returns. Some specialist lenders might consider applications with just one year, but your options will be more limited.
Can I use projected income in my application?
Generally no. Lenders focus on what you've actually earned and declared to HMRC. However, signed contracts for future work can support your application as evidence of ongoing income.
What if my income varies dramatically from month to month?
This is normal for freelancers. Lenders typically look at your average annual income over 2-3 years. Keep detailed records showing the pattern of your work and any seasonal fluctuations.
Do I need a bigger deposit as a freelancer?
Not necessarily, but a larger deposit can help offset lenders' concerns about income stability. It also gives you access to better interest rates across all lender types.
Should I wait until after a good year to apply?
It can help, but remember lenders look at averages over multiple years. One excellent year won't override a previous poor year, but it will improve your average.
Jargon Buster
SA302: The official HMRC document showing your tax calculation for a specific year. Lenders use this to verify your declared income.
Affordability assessment: The process lenders use to check if you can maintain mortgage payments. They stress-test your income against potential rate rises.
Net profit: Your income after business expenses. This is usually what lenders focus on rather than your gross turnover.
Loan-to-value ratio (LTV): The percentage of the property value you're borrowing. Lower LTVs get better rates and are easier to obtain.
Credit score: A number representing your creditworthiness based on your borrowing and repayment history.
Wrap-up
Getting a mortgage as a freelancer takes more preparation than a standard application, but it's absolutely doable. The key is demonstrating that your income is reliable and that you manage money responsibly.
Start organising your paperwork well before you plan to apply. Clean financial records and a solid savings account will put you in the strongest possible position.
Don't assume you'll get rejected by mainstream lenders, but do consider specialist options if your income is particularly variable or you haven't been trading for long.
Take time to find the right lender for your situation. A mortgage broker who understands self-employed income can be invaluable in navigating the options and presenting your case in the best light.
Ready to level up your freelance business? Join Pixelhaze Academy for practical resources and expert guidance.