Self Employed First Time Buyers

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First time Buyers

A Guide for Self Employed First Time Buyers in the UK

Congratulations on taking the first steps towards homeownership! As a self employed first time buyer in the UK, there might be a few extra hurdles to navigate compared to your salaried counterparts. But fear not, fellow freelancer, contractor, or solopreneur – this guide will equip you with the knowledge and confidence to achieve your property dreams.

Understanding Deposits:

First things first: the deposit. While a 5% minimum is standard, the self employed game requires more muscle. Aim for a larger deposit, ideally 10% or even 15%, to improve your chances of securing a favourable mortgage with lower interest rates. Remember, a more significant down payment translates to less borrowing and reduces your monthly outgoing.

Income Essentials:

Lenders love stability, and unfortunately, inconsistent income doesn’t exactly inspire confidence. Whilst it is possible to get a mortgage with one year’s self employed accounts the options are limited. Preparing two years of tax returns and business accounts to showcase your earnings will give you a lot more options to explore. This means that you will have more choices for a competitive rate. Be proactive – if you work with an accountant, it’s essential to explain your house buying goals to them so that they can make sure they have your accountants in good order for when it’s time to apply to the mortgage lender. 

Navigating the Mortgage Market for the self employed:

Navigating the mortgage market can be overwhelming, and there are quite a lot of lenders that only deal with customers through a mortgage advisor. Consider teaming up with a mortgage advisor specialising in self employed borrowers. They understand your unique financial situation and can help you find the best deals tailored to your income fluctuations and business structure. Plus, they’ll handle the paperwork and negotiations, saving you precious time and stress.

What Mortgage product do I Choose?

Not all mortgages are the same. As a self employed individual, choosing the right option for your circumstances is essential. Below is a list of the different types of mortgages available to the self employed. 

  • Fixed-Rate Mortgage: Lock in your interest rate for a set period. It provides stability and peace of mind, particularly helpful when income fluctuates.
  • Variable-Rate Mortgage: Interest rates that can fluctuate with market conditions.
  • Tracker Mortgage: Rates that ‘track’ a nominated interest rate, usually the Bank of England Base Rate. 
  • Interest-Only Mortgage: Monthly payments cover only the interest, not the capital. 
  • Repayment Mortgage: Monthly payments that include both principal and interest. 
  • Offset mortgage: links your savings to your mortgage, reducing the interest you pay on the mortgage by the amount in your savings.

Affordability Assessment:

Lenders will scrutinise your finances, evaluating your income, living expenses, and debts. Be realistic about your budget and choose a mortgage you can comfortably manage even during income dips. Living off the edge is stressful, even with stunning real estate!

Bonus Tips for the Bold:

  • Get organised: Keep meticulous financial records to make the application process smoother.
  • Network with fellow self employed homeowners: Learn from their experiences and pick up valuable tips.
  • Understand your credit score: A sparkling credit history boosts your borrowing power. Use this link to get access to our recommended credit file. (link) 
  • Reduce existing debts: Lower liabilities make you a more attractive borrower.

Remember, owning your own home is a marathon, not a sprint. Be prepared for the journey, research, and seek expert guidance. With some planning and perseverance, you’ll soon be celebrating your housewarming, champagne flute in hand, knowing you’ve conquered the self employed first-time buyer challenge! 

Why is the first mortgage payment higher?

The initial mortgage payments might be higher than your regular monthly payments. That’s because they include interest from the day the funds were released up until the end of that month, along with the payment for the upcoming month. This structure ensures that you’re getting the mortgage payment cycle in sync with the calendar month.

Can a first-time buyer rent out their property?

Generally, first-time buyers can’t rent their property. That’s because the lender approved the mortgage for a residential home, not a buy-to-let property. In certain circumstances you can ask the lender for consent to let. Where a lender grants consent to let the property, it means they’re permitting you to rent out your house while you still have a residential mortgage. However, this permission usually has a time limit, typically lasting for 6 to 12 months. Consent to let is ideal if you intend to rent out your property for a temporary period, as it’s not a long-term arrangement. Always make sure to understand the terms and conditions of consent to let from your lender.

Can I get a Buy to let as a First time buyer?

Indeed, a first-time buyer can apply for a buy-to-let mortgage, but it might be more challenging compared to those who have owned property before. The availability of buy-to-let mortgages for first-time buyers is limited, accounting for roughly a fifth of the market. Additionally, you might need to provide a larger deposit when seeking such a mortgage. It’s advisable to research thoroughly and consult with a mortgage adviso to understand your options and requirements.

Understand Your Credit File

When greeting ready to apply for a mortgage it’s essential you understand your credit history.


We recommend Check My File who offer a 30 day free trial (usually £14.99 per month, you can cancel at anytime) 


The Check My File Report provides you with a summary from three different credit reference agencies (Experian, Equifax & TransUnion).

Mortgage lenders use different credit reference agencies and you are able to see what the lender see prior to making any applications.


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