If you work for yourself and are looking to buy a home, you might be wondering: Will a lender actually class me as self-employed?
The answer isn’t always straightforward, as different lenders have their own definitions. However, understanding how mortgage providers view self-employment can help you prepare for your application. We’re self employed experts at Bee Financial – we’ve honed years of experience learning how to make your self empoloyed income work as hard as possible when it comes to securing a mortgage.
What Does ‘Self-Employed’ mean for a Mortgage?
Most lenders consider you self-employed if you own at least 20-25% of a business that provides your main source of income. This applies to a variety of work arrangements, including:
1. Sole Traders
A sole trader is someone who owns and runs a business independently. You might have employees, but you are personally responsible for the business’s success and financials.
2. Contractors
A contractor provides services to another business for a fixed period, either on an hourly basis or for a project. Contractors can operate as sole traders or through their own limited company.
3. Directors or Partners in a Limited Company
If you own shares in a business and help manage its operations, you are typically classed as self-employed, even if you share responsibilities with other directors or partners.
4. Freelancers
Freelancers often work on short-term projects for multiple clients. If you work on temporary contracts or per-project agreements, lenders will usually class you as self-employed.
What About Agency & Umbrella Workers?
If you work through an agency or are paid via an umbrella company, you might not be classed as self-employed. However, you could still face similar challenges when applying for a mortgage, such as proving a steady income.
Tip: If you’re an agency or umbrella worker, speaking to a mortgage broker can help you find lenders who understand your financial situation.
Next Steps: Can You Get a Mortgage?
If you’re self-employed, getting a mortgage might require more paperwork and financial proof than someone in a traditional 9-to-5 job. But don’t worry—we’ve helped hundreds of self-employed people, company directors and umbrella workers get mortgages, so if you want some expert tailored advice get in touch today.
