For many self-employed business owners in the UK, securing a mortgage with only one year’s worth of accounts can seem like a daunting challenge. Traditional lenders often prefer applicants with a stable income history spanning two or more years. However, with the right preparation and guidance, it is entirely possible to secure a mortgage even if your business is relatively new.
In this blog post, we’ll break down everything you need to know about getting a mortgage with just one year of accounts, including tips to strengthen your application and the best places to look for lender support.
Can You Get a Mortgage with 1 Year’s Accounts?
Yes, it is possible to get a mortgage with only one year’s worth of accounts, but the process may be slightly more complex. Most lenders want to see proof of stable income over time, which is why they typically require two to three years of trading history. However, some lenders understand the challenges faced by newer self-employed individuals and may consider your application based on just one year of trading.
What Lenders Look for in Self-Employed Applicants
To assess your mortgage application, lenders will focus on the following:
Your Income Stability: Even with one year of accounts, lenders want to see consistent and sufficient income and they may ask for recent business bank statements to assess more recent business levels.
Your Deposit Amount: A larger deposit (e.g., 15%-20%) can mitigate the risk in the lender’s eyes.
Credit History: A strong credit score demonstrates your ability to manage financial commitments.
Business Viability: If your business is growing steadily, it may reassure lenders. Lenders also look more favourably if you have worked in the same line of work before or simply have incorporated from being a sole trader.
How to Strengthen Your Application
Here are some actionable steps to boost your chances of approval:
- Hire a Qualified Accountant
Lenders typically want to see your accounts prepared by a certified or chartered accountant. A professional accountant can ensure your financial records meet lender requirements. Look for accountants that are members of a professional body such as ICAEW or ACCA. - Provide a Strong SA302 and Tax Overview
The SA302 form and accompanying tax year overview from HMRC provide proof of your declared income. Ensure these documents reflect your earnings clearly and accurately. - Improve Your Credit Score
A high credit score can make you a more attractive borrower. Check your credit report for errors, pay off outstanding debts, and avoid applying for new credit in the months leading up to your mortgage application. - Save for a Larger Deposit
A higher deposit not only increases your chances of approval but can also help you secure better mortgage rates. Aim for at least 10%-20% of the property’s value. - Work with a Mortgage Broker
A specialist mortgage broker, like Mortgage Links, can connect you with lenders who are open to considering self-employed applicants with just one year of accounts. They can also guide you through the application process and negotiate on your behalf.
Why Choose Mortgage Links?
At Mortgage Links, we understand the unique challenges faced by self-employed individuals, and we’re here to guide you every step of the way. One of the key reasons to work with us is our expertise: one of our owners, James, is a qualified accountant with years of experience in senior accounting roles.
The Benefits of Working with an Accountant-Qualified Mortgage Broker
Deep Financial Understanding:
With a background in accounting, we can analyse your financial documents with precision, ensuring that your income, accounts and tax records are presented in the best possible way to lenders.
Tailored Solutions for Self-Employed Applicants:
Understanding the nuances of self-employment income such as dividends, retained profits and fluctuating earnings, allows us to match you with lenders who are more flexible and accommodating.
Accurate Preparation of Documents:
Misaligned or incomplete documentation is a common reason for mortgage delays or rejections. Our accounting expertise ensures your paperwork meets lender requirements, increasing the likelihood of a smooth approval process.
By combining mortgage industry knowledge with accounting expertise, Mortgage Links is uniquely positioned to offer self-employed individuals a seamless and stress-free journey toward home ownership.
Final Thoughts
Getting a mortgage with one year of accounts in the UK is achievable with the right preparation and support. By taking proactive steps to strengthen your application and working with an experienced mortgage broker, you can make your dream of homeownership a reality.
Ready to take the next step? Contact Mortgage Links today and let us help you find the perfect mortgage solution for your needs.
