Self-Employed Mortgages
Getting a mortgage when you're self-employed is more complex than PAYE, but it's done every day. How lenders assess your income — and how to present your application well.
How banks assess self-employed income
Banks cannot simply look at a payslip when you're self-employed. Instead, they assess your trading income over the most recent two financial years using your tax returns and financial statements.
Two-year average
Most lenders take the average of your last two years' taxable income (net profit after expenses but before addbacks). If there's a large difference between the two years, some lenders use the lower year to be conservative.
Addbacks applied
Certain non-cash or one-off expenses are added back to increase your assessable income. Common addbacks include depreciation, interest on existing loans, and one-off expenses that won't recur.
Business structure matters
How your business is structured (sole trader, company, trust) affects what income lenders can see and how they assess it. Your accountant's approach to the balance sheet also plays a role.
What documentation you'll need
Prepare these before starting your application. Lenders are much more confident when financials are complete, well-presented, and prepared by an accountant.
Personal tax returns
Two years of IR3 returns and associated income summaries from IRD
Financial statements
Two years of company or trust financial statements (P&L, balance sheet) prepared by a CA
GST returns
If GST registered — typically the last two years of GST returns as a trading evidence
Bank statements
Three to six months of business and personal bank statements
Current year accounts
Management accounts or interim financials for the current trading year (if available)
Standard documents
ID, proof of address, and any existing liability statements (loans, credit cards)
Why presentation matters
Banks assess self-employed applications more carefully than standard PAYE applications. A well-presented application — with complete financials, a clear income narrative, and all addbacks identified — is processed more smoothly and often results in a higher assessed income.
An adviser who regularly works with self-employed borrowers knows which lenders are most generous in their income assessment, which addbacks each bank accepts, and how to present your financials to give your application the best chance of success.
Not all lenders are the same
Self-employed income assessment varies significantly between lenders:
Main banks
Typically require two years of financials and use either the average or lower of the two years. Some have more conservative addback policies than others.
Non-bank lenders
Often more flexible with income assessment, business structure, and Alt Doc pathways — but typically at higher interest rates. Useful when the main banks don't fit.
Alt Doc lending
Some lenders offer 'Alt Doc' products for self-employed borrowers who can't meet standard documentation requirements. These usually require a larger deposit (often 30–40%) and higher rates.
Self-employed and looking to borrow?
Jeremy works with self-employed borrowers regularly. He can assess your financials, identify the best lender for your situation, and help you present your application to the strongest possible standard.