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Being self-employed can sometimes make applying for a mortgage feel more complicated. Without traditional payslips or a fixed monthly salary, you may wonder whether homeownership schemes are still open to you.
So, can you buy a Shared Ownership home if you’re self-employed?
Yes, you can apply for Shared Ownership if you’re self-employed. Your employment status does not automatically prevent you from using the scheme. However, you may need to provide additional evidence of your income so that a mortgage lender can understand your earnings and decide how much you can afford to borrow.
Keep reading to find out how Shared Ownership works for self-employed buyers, what documents you may need, and how you can prepare for a mortgage application.
Provided you meet the relevant eligibility and affordability requirements, a self-employed buyer can apply for Shared Ownership in the same way employed applicants can.
Under the current Shared Ownership rules in England, your household income must generally be £80,000 a year or less, rising to £90,000 or less if you are buying in London. You must also be unable to afford all of the deposit and mortgage payments needed to buy a suitable home outright.
At least one of several additional circumstances must normally apply. For example, you may be:
Being self-employed is therefore not the main issue. The important question is whether you meet the scheme’s criteria and can demonstrate that the mortgage, rent, service charges, and other household costs will be affordable to you.
When you are employed, a mortgage lender can usually verify your income using payslips and a P60. But if you work for yourself, your income might vary from month to month, so lenders normally need to look at a wider range of information.
Self-employed mortgage applicants may be asked to provide bank statements, business accounts, and information about the Income Tax they have paid. Other requests can include two or three years of tax returns and business accounts.
Exactly how your income is calculated will depend on your circumstances and the lender.
If you operate as a sole trader, lenders will usually be interested in the profit your business generates rather than simply the amount of money entering your business account.
They may compare your earnings across previous tax years to understand whether your income is consistent, increasing, or reducing.
If you run a limited company, your income may consist of a salary, dividends, or a combination of the two.
Different mortgage lenders may assess company directors in different ways. For example, some may focus primarily on the salary and dividends you have taken, while others may be willing to consider additional information about the company’s finances.
If you operate through a partnership, the lender may look at your individual share of the partnership’s profits alongside your tax records and accounts.
The exact method used can vary considerably between mortgage providers. This is why choosing a mortgage adviser who understands both Shared Ownership and self-employed applications is ideal.
TIP: Preparing your documents early can make applying for a Shared Ownership mortgage much more straightforward.
Depending on your business structure, lender, and circumstances, you may be asked for:
Keeping your accounts, tax returns, and bank records organised can therefore save time once you find a Shared Ownership home you would like to buy.
There is no single rule that applies to every self-employed Shared Ownership mortgage. However, two or three years of accounts or tax records are commonly requested by mortgage lenders.
Having a longer trading history can make it easier for a lender to see how your business has performed over time. But having less than two years of accounts does not necessarily mean that getting a mortgage is impossible. Lending criteria vary, and some lenders may consider applicants with a shorter trading history depending on their circumstances.
For example, your application could be viewed differently if you recently became self-employed within the same industry you previously worked in, compared with someone who has started an entirely new business.
TIP: If you have only been self-employed for a short time, speaking to a mortgage adviser before reserving a property could help you understand which options may be available.
Being organised can make a significant difference when applying for a Shared Ownership mortgage as a self-employed buyer. Below, we’ve listed some tips to improve your mortgage application.
Self-employed buyers can sometimes face some additional hurdles, but understanding them early gives you more time to prepare.
Your income may change from one year to the next. For this reason, a lender will want to be satisfied that your mortgage remains affordable.
Having clear accounts can help provide context around any changes.
If you have only recently become self-employed, you may not yet have the two or three years of financial records that many lenders prefer.
This can reduce the number of mortgage options available, although individual lending criteria vary.
Limited company directors sometimes keep money within the business rather than taking everything as personal income.
This may be reasonable from a business perspective, but it may affect how some mortgage lenders calculate your personal affordability.
Changing from sole trader to limited company status, taking on a business partner, or significantly changing the type of work your business does could mean that a lender asks additional questions.
Good financial records can help explain these changes.
With Shared Ownership, affordability is about more than your mortgage.
You normally need to budget for:
When you apply for a Shared Ownership property, the housing provider will also check that the home is affordable for you.
If you work for yourself and have found that buying a suitable home outright is beyond your current budget, Shared Ownership could offer another route onto the property ladder.
Being self-employed should not stop you from exploring Shared Ownership. The key is being able to demonstrate your income clearly, meet the scheme’s eligibility requirements, and show that your housing costs will be affordable.
Take a look at Plumlife’s Shared Ownership homes to see what properties are currently available, or use our Shared Ownership eligibility checker to learn more about whether the scheme could be suitable for you.
It can involve more paperwork, but being self-employed does not automatically make you unsuitable for a mortgage.
The main difference is how you prove your income. Instead of relying primarily on payslips, a lender may ask for accounts, tax calculations, tax year overviews, and bank statements.
Possibly, but your choice of lenders may be more limited.
Many mortgage providers typically request two or three years of financial records from self-employed applicants. However, requirements vary, and some lenders may consider a shorter trading history depending on your circumstances.
Speaking to a mortgage adviser can help you understand your options.
You may be asked to provide one, yes. An SA302 provides evidence of the income you have declared to HMRC and the tax calculation for that year.
Your lender will confirm exactly which tax documents it requires.
Your required deposit will depend on the mortgage product, lender, property, size of the share you are purchasing, and your individual financial circumstances. Being self-employed does not automatically mean that you must provide a larger deposit.
Yes, provided you both meet the relevant eligibility requirements.
Your combined household income and financial circumstances will be considered. If your partner is employed, their salary may be assessed alongside your self-employed income when working out affordability.
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