Last reviewed on 26th September 2023 by Martin Alexander (Mortgage Advisor)

Being self-employed certainly has its benefits but in terms of getting a mortgage, it can make things slightly difficult. The good news is that some lenders have developed a more relaxed approach to lending to the self-employed. This is especially true where buy-to-let mortgages are concerned.

There are around 4.24 million self-employed workers living in the UK and as a result, there are many lenders that consider self-employed applicants. For this reason, self-employed buy to let mortgages aren’t as difficult as applicants seem to think. A structured approach to your mortgage can even secure great mortgage rates.

As lenders have varied criteria, some may request a minimum income or accounts for three years. On the other hand, there are lenders that will approve mortgages with:

• Only 1 year of accounts
• No minimum income requirement
• Zero income for experienced landlords

Can I get a buy to let mortgage when self-employed?

Buy to let mortgages are possible for the self-employed. Lenders that have zero income requirements are typically better suited for directors and sole traders. This is because your income may be tied up within the business.

Even if a self-employed applicant showed just £100 profit on their accounts, lenders will view this as an income. As some lenders have no minimum income requirement, this won’t be an issue. Furthermore, if you’ve already owned buy to let property, lenders will view you as a smaller risk compared to less experienced borrowers. This means that experienced landlords can obtain buy-to-let mortgages without having an income.

The reason lenders agree is that rent will usually cover mortgage payments and leave a monthly profit for the landlord. As a result, lenders don’t need to depend on the income of an applicant in order to repay the mortgage. As the majority of buy to let mortgages are taken out on interest-only rates, monthly mortgage payments can be very low.

How do buy to let lenders assess self-employed applicants?

Self-employed applicants are almost always assessed on a case-by-case basis. This is because each applicant who’s self-employed will have unique circumstances. Nonetheless, if your income and accounts are clearly presented, getting a buy to let mortgage shouldn’t be a problem. This is especially true if you’ve approached a suitable lender from the start.

Buy to let lenders assess self-employed applicants in the following way:

• Income assessment – Although lenders will be more interested in the rental income of the property, showing a healthy business profit can boost your application. Lenders that have zero income requirements will be better suited for those who show a low income on their accounts.
• Rental value – The most important aspect of your application will be the rental value of the property you’re purchasing. This is because it can show lenders that your rental income alone is enough to repay the mortgage. As a result, aim for your rental income to be at least 125% of the mortgage repayments. Some lenders will require the monthly rental income to be 145% of the mortgage each month.
• Business type – Lenders will assess the type of business you own. For instance, directors will be assessed differently from sole traders and freelancers. Depending on the nature of your business type, you’ll need to approach lenders that are suitable. This is because certain lenders will be better suited for directors, whereas other lenders will be more suited to sole traders.
• Deposit amount – You will in almost all cases need at least a 25% deposit. This is because buy to let deals often start at 75% LTV. Lenders may on some occasions accept slightly lower deposits of 15-20% but it isn’t advised. Using a higher deposit will typically secure favourable rates.
• Landlord experience – If you’re a first-time landlord don’t panic! Every landlord has to begin somewhere and lenders understand this. That being said, having a proven track record as a landlord can certainly improve your application. This can be crucial when you’re self-employed, especially if you show a low business income.

Are there buy to let mortgages for self-employed applicants?

There aren’t any particular buy to let mortgages for the self-employed. The same mortgages are offered to buy to let applicants, irrespective of how they’re employed.

Although there aren’t any differences in the mortgage products being offered, there are certainly differences in how self-employed applicants are assessed. Lenders are typically more cautious when assessing self-employed borrowers in comparison to the employed. This is because of the potential risk of being a business owner.

The good news is that there are lenders more suitable for self-employed applicants. There are also lenders that have no minimum requirements, which can make mortgage approval easier.

How to get a buy to let mortgage when you’re self-employed

Before approaching a mortgage lender, speak to an expert to ensure your application is ready. We rarely recommend approaching a mortgage lender at random, as they might not be suited to your circumstances. This is especially true if you’re self-employed. An advisor can help you with the following:

• Ensure your accounts are in order – Whether you file company accounts or a self-assessment, your lender will request your income documents. Providing income documents for three years will strengthen your application, but it is still possible with accounts for one year.
• Check your buy to let property – Assessing the rental value of your property is highly recommended. This is to ensure you’re buying a suitable investment that can generate enough rental income to repay your buy to let mortgage.
• Check if you’re eligible – Each lender has varied criteria so you’ll need to check with your advisor if it’s likely that you’ll be accepted for a mortgage. This can involve assessments on whether the rental value is high enough to cover the mortgage and whether your personal circumstances meet the eligibility for a mortgage.

Can I remortgage a buy to let if I’m self-employed?

Yes, it’s possible for self-employed borrowers to remortgage a buy to let property. It’s easier to switch deals with your existing lender, but if you want to switch lenders completely, you’ll have to undergo an assessment. The assessment will be similar to when you first applied for a mortgage. That being said, it can be worth doing if another lender has a great deal that you simply can’t miss.

The process should be straightforward if you were self-employed when you initially got your buy to let mortgage. Furthermore, if your income hasn’t changed much since you were approved, you shouldn’t run into any significant problems. In comparison, if you were previously employed or the income from your business has reduced significantly, then you’ll need to approach lenders with caution.

Even if the income you earn from your business is low, it’s still possible to remortgage a buy to let. This is because lenders will assess your repayment history since you’ve had the buy to let. Furthermore, if the rental income can repay the mortgage, it can compensate for a low business income.

Read more: How to remortgage a buy to let

How much can I borrow if I’m self-employed?

Buy to let lenders rarely use business income to assess how much applicants are able to borrow. Instead, lenders will assess the amount of rental income your property can generate. That being said, having a secure income can still improve your mortgage chances.

Lenders will require details of your buy to let, such as the rental income it can achieve. This is because the rental income will need to be between 125% – 145% of the mortgage payments. Some lenders will send their own surveyors to check rental values, whereas others will use valuations from ARLA-qualified letting agents.

Use our self-employed calculator here.

Can mortgage advisors help self-employed applicants?

Our expert mortgage advisors specialise in mortgages for the self-employed. Here are a few reasons to contact us!

• Access to the whole market – Our advisors aren’t tied to one lender, meaning that they’ll search the entire market for a product that suits you.
• Exclusive products – Our experts have access to exclusive mortgage products that may not be available elsewhere.
• Independent – Our advisors will always do what’s best for you, as they are not tied to certain products and companies.
• Experienced advisors – Our specialists are all professional, qualified, and extremely knowledgeable on self-employed buy-to-let mortgages
• Specialist advisors – With specialist knowledge in fields such as self-employed mortgages and bad credit mortgages. Even when a mortgage seems unlikely, our advisors are often able to locate approval.

You can make an enquiry below to get started.