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Sole Trader? Partnership? Director of a Limited Company?

Those who are a sole trader, in a partnership or a director of a limited company should be able to get a mortgage from a normal lender as long as the loan is classed as affordable and they have been trading for several years. If you don’t quite meet the standard lending criteria, then there are specialist lenders that offer more flexible underwriting, but they may require a larger deposit.  

Limited Company Directors...

If you’re a sole trader, then your application for a mortgage will have to be as a sole trader. However, if you’re a limited company director, then you could apply using your personal income in the same way a sole trader would, so long as it’s before the end of your company tax year.

You could use your self-assessment tax return to evidence your income but as limited company tax years often end differently to personal ones, when you apply for a mortgage will affect which lenders you can apply to.  

How long do I need to be a sole trader for before getting a mortgage?

Unlike the pre-2008 world, a proven history of your trading is now required by a lender when they’re establishing your annual income.  Most lenders require three years’ trading history before they will class your income as stable enough to lend on. However, there are lenders out there that will consider your application if you don’t have three years’ accounts.  

  • Sole-trader income requirements for a mortgage: If you’re a sole trader getting a mortgage is the same process and requires the same evidence as if you’re a partnership, with a minimum of 12 months trading.

  • Partnership mortgage income requirements: 12 months as above

  • Contractors: If you are a sole-trader contractor who has not yet fulfilled 12 months trading, it is possible to use your day-rate income

  • CIS scheme: As with contractors, it’s possible to borrow based on your remittance slips and gross income as if you were employed, from just 6 months of trading.

Get in touch with The Mortgage Hut

Whatever your situation, speak to a friendly, professional mortgage adviser from The Mortgage Hut for mortgage advice based on your personal circumstances.