Self-Employed Mortgage Calculator (UK)

How lenders actually look at self-employed income

What this calculator doesn't cover

• Affordability stress test: lenders simulate your repayments at a higher rate (typically the initial rate +3pp) to ensure you'd cope with a rise. This can reduce the maximum offer by 5–15% versus the simple multiple.
• Existing debt: credit cards, car finance, personal loans all reduce affordability. Each £100/month of existing repayments roughly knocks ~£20,000 off the borrowing ceiling.
• Deposit / loan-to-value: the calculator shows the income-multiple ceiling. Your actual offer is constrained by your deposit. At 90% LTV (10% deposit) the rate is higher and the lender pool smaller; at 75% LTV (25% deposit) you get the best rates and broadest choice.
• Credit score: a clean Experian / Equifax file unlocks the better rates. Recent missed payments, CCJs, or high credit utilisation will hurt the offer.
• Buy-to-let: uses different rules (rental coverage ratio, typically 145% of mortgage interest at 5.5%). Use a BTL-specific calculator.
• Help to Buy / shared ownership: Help to Buy has closed; shared-ownership calculations differ from standard residential.
• Joint applications: typical lender approach is to combine both incomes, but exact treatment varies (some discount the second income by 10–20%, especially if it's self-employed).

Frequently asked questions

Why do specialist contractor lenders use day rate × 5 × 46?

Because for a contractor on a £500/day contract, that gives an annualised income figure (£115,000) that the underwriter can apply a normal income multiple to. The 46 weeks (rather than 52) reflects realistic billable time, typical contractors lose 6 weeks of the year to gaps between contracts, leave, training, or sick days. A small handful of lenders use 48 weeks, which raises the figure by ~4%. High-street lenders without a contractor product would instead want 2-3 years of self-assessment SA302s, which gives a smaller figure for most contractors because it only counts what was actually invoiced and paid in the prior tax years.

Why do lenders treat sole traders worse than employees?

Sole trader income shows as 'net profit' on your SA302, what's left after legitimate business expenses. Lenders take that as your real take-home, which is typically 60–80% of your gross billings. For an employed person on £60,000 gross, the lender uses £60,000 as the multiple base; for a sole trader billing £80,000 with £20,000 of expenses, the lender uses £60,000 of net profit. Same effective income but the SAME multiple base means the borrowing capacity matches. The 'worse treatment' shows up in the 2-3 year history requirement (a salaried person needs only 3 months' payslips) and in stricter affordability stress tests.

What if my latest tax year is much lower than the year before?

This is the declining-income flag. Many lenders will use the LOWER figure (most recent year) rather than the average, they're forecasting forward, not averaging history. A small dip (say, 10%) often gets averaged anyway; a 30%+ drop will almost always trigger the lower-figure rule. A specialist broker can find lenders who'll average even with a decline, but expect to be at the lower (4×) end of the multiple range. If the decline was due to a one-off (illness, major life event), include a covering letter explaining; underwriters can use discretion.

Can a Ltd director borrow against retained company profit?

Sometimes, but only with specialist lenders. The standard high-street treatment is salary + dividends (what you actually paid yourself). A handful of lenders (Halifax, Clydesdale, Saffron, Kensington) will use net profit BEFORE dividend extraction, which is much higher for directors who retain earnings, often 30–50% higher borrowing capacity. The catch: these lenders typically charge slightly higher rates (10–30bps premium), have stricter deposit requirements (often 15%+ rather than 10%), and the underwriting process is longer. Worth talking to a specialist broker to check.

What deposit will I actually need?

For self-employed applicants the realistic minimum is 10% deposit (90% loan-to-value), but rates improve sharply at 15% (85% LTV) and again at 25% (75% LTV). A few specialist contractor lenders go to 95% LTV (5% deposit) but availability is limited and rates are 50–100bps higher than 90% LTV. Help to Buy is closed for new applications. As a rule of thumb: for a £400,000 property, expect £40,000 (10%) at minimum, £60,000 (15%) for better rates, and budget £4,000–£6,000 for fees on top.

I just switched from employed to self-employed. Can I get a mortgage?

Difficult but not impossible. Most lenders want 2 years of self-employed accounts. Some will accept 1 year if your industry is the same as your previous employed role (e.g., you were a permanent software developer who became a contractor doing the same work). A small specialist segment (Halifax contractor product, some private banks) will look at your contract value alone if you have a 6-month rolling contract in a stable role. Expect a higher rate and stricter affordability tests. Wait until you have 2 full years of accounts if you can, the rate difference is substantial.

Can I get a joint mortgage with one self-employed and one PAYE applicant?

Yes, this is actually one of the easier paths if your partner has a strong employed income. Lenders typically use both incomes for the multiple, and the PAYE income provides stability that compensates for the self-employed variability. Most lenders will average your self-employed income normally and add the PAYE figure on top. A few specialist lenders will use the higher contractor day-rate × 46 figure for one applicant alongside the PAYE figure for the other, which gives the highest combined borrowing.

Will using my IR35 status (inside vs outside) affect borrowing?

Indirectly. Inside-IR35 contractors via umbrella have payslips that look like regular PAYE income, most high-street lenders will treat them as standard employed applicants once you have 6+ months of payslips. Outside-IR35 Ltd contractors face the standard self-employed underwriting (2 years' accounts, salary + dividends average, declining-income flag etc.). If you've SWITCHED from outside to inside in the last year, lenders may want to understand why (some interpret it as instability). The cleanest case is consistent multi-year history in the same income category.

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