Getting a Mortgage as a Sole Trader

Sole trader mortgages are essentially standard home loans offered to people who work for themselves as sole traders (i.e. self-employed individuals who are the sole proprietors of their business).

Many sole traders worry that being self-employed will make it harder to get a mortgage. The good news is that sole traders can absolutely get mortgages – there are plenty of lenders who will consider self-employed applicants

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Your home may be repossessed if you do not keep up repayments on your mortgage.

Can Sole Traders get Mortgages?

Yes – a sole trader can get a mortgage. There isn’t a special “sole trader mortgage” product distinct from a normal residential mortgage, but many lenders are willing to lend to sole traders as part of their standard offerings.

The key difference is that lenders will treat you as a self-employed applicant, which means they’ll scrutinise your income and finances a bit more closely.

It’s important to know that policies vary between lenders. Some high-street banks have stricter requirements for self-employed borrowers – for example, they might ask for a higher deposit and 2-3 years of financial records to prove your income.

On the other hand, there are specialist mortgage lenders who are more flexible with sole trader mortgages.

These niche lenders may accept shorter trading histories or smaller deposits, especially if the rest of your application is strong. In short, sole traders can get mortgages, but you may need to shop around (or work with a broker) to find the lenders that offer the best terms for self-employed applicants.

How long do I need to be a sole trader to get a mortgage?

Most mortgage lenders prefer you to have a track record of self-employed income before they’ll approve a mortgage. In practice, many lenders will ask for at least two to three years of accounts or self-assessment tax returns as evidence of your earnings.

Having 2-3 years of trading records is a common rule of thumb for sole trader mortgages because it shows a consistent income trend. The reason lenders like a longer history is that it gives them confidence that your business and income are stable enough to afford the mortgage over time.

That said, you don’t always need a full 3-year history. An increasing number of providers have relaxed their rules in recent years.

Typically, 12 months is the minimum trading period in many cases. Most lenders won’t consider an application with less than one year of self-employed income, since they have no way to verify your ability to repay with so little history.

But if you’ve been a sole trader for at least a year and your finances are solid, there are lenders who might approve you with just 1 year of accounts (especially if you can provide a strong deposit or other proof of ongoing work).

What documents do I need for a sole trader mortgage?

When applying for a mortgage as a sole trader, you’ll need to prove your income and provide standard documentation. Without an employer’s payslips, the lender relies on your financial documents to assess how much you earn and whether you can afford the loan. Here are the key documents typically required:

Proof of identity: A photo ID such as your passport or driving licence.
Proof of address: A recent utility bill, council tax bill, or bank statement showing your address.
Proof of income: Your self-assessment tax returns (SA302 Tax Calculation forms from HMRC) for the past 2–3 years, along with the accompanying Tax Year Overviews.These documents show your declared income as a sole trader and are crucial for lenders to verify your earnings.
Bank statements: Typically the last 3–6 months of your bank statements (personal and/or business accounts). Lenders review these to see your regular income deposits and outgoings. This helps them check that your stated income is credible and to understand your spending commitments and any other debts
In addition to the above, be prepared to provide any other standard mortgage application documents (such as details of your deposit source, proof of any other income, etc.). It’s also a good idea to have your financial paperwork well-organised.

How much can I borrow as a sole trader?

Sole traders are generally assessed for borrowing capacity in a similar way to any other borrower – primarily based on income and affordability. Lenders typically use an income multiple to estimate the maximum loan. For many lenders, the cap is around 3.5 to 4.5 times your annual self-employed income although there are lenders that can offer more in special circumstances.

Keep in mind that these numbers aren’t guarantees – they’re just rough limits. How much you can borrow will also depend on your overall affordability. Lenders will look at your regular expenses and any other debts to calculate what’s called a debt-to-income ratio (DTI). This is the percentage of your monthly income that goes toward existing credit commitments. If a large portion of your income is already used up by other loans, credit card payments, etc., the lender may offer you less, because adding a mortgage on top might stretch your budget.

Deposit also plays a role. Being a sole trader doesn’t inherently reduce how much you can borrow, but if your deposit is small, it can cap your loan due to loan-to-value (LTV) limits. Most residential mortgages require at least 5–10% deposit. If you only have the minimum 5% down, your max loan is 95% of the property value, and not all lenders offer high LTV loans to self-employed people. A bigger deposit (e.g. 15-20%) not only improves your chances of approval but could also allow access to lenders who might offer larger multiples or better rates

Can I get a sole trader mortgage with bad credit?

Getting a mortgage can be more challenging with a bad credit history, but it’s not impossible – even for sole traders. Many people assume that past credit issues will completely block them from getting a mortgage, but that isn’t strictly true.

There are specialist lenders who offer bad credit mortgages and will consider self-employed applicants, the key is that you may have fewer options and the approval will depend on the details of your credit history.

Lenders will look at what kind of bad credit you have, and how long ago it occurred. Minor issues – like a single missed credit card payment a year or two ago – are viewed more leniently by many lenders. They might overlook one or two small blips, especially if you’ve been managing your finances well since then.

More serious issues – such as defaults, County Court Judgments (CCJs), or a bankruptcy – will narrow your choices, but even these don’t automatically disqualify you in every case.

If you’re a sole trader with bad credit, be prepared that you’ll likely need to meet some extra conditions. One common requirement is a larger deposit. While a standard mortgage might be available with 5–10% down, a bad credit case often needs more – sometimes 15% or even 20%+ deposit, depending on severity of the credit issues.

Ready to take the next step?

If you have more questions about getting a mortgage as a company director – or if you want tailored advice for your own situation – we’re here to help. Book a fee-free mortgage discovery call with our team today to discuss your needs and find out what options are available.