Can I get a mortgage if I am freelance?

Podcast approved by The Openwork Partnership on 11/7/2024

Can you get a mortgage as a freelancer? How hard is this?

Yes, you can get a mortgage as a freelancer. How hard it is will ultimately depend on a range of factors, including the length of time you’ve been working freelance and how you can evidence your income.

We can take your income from your tax returns or from your current and previous employment contracts, depending on how you’re set up to work freelance. A broker can recommend the most suitable lender for you to meet with your circumstances.

What types of mortgages can I get if I’m a freelancer?

There are no differences to the mortgages available to a freelancer. You can access the same mortgage products.

How do I know if I’m classed as a freelancer? How long do you have to be a freelancer before getting a mortgage?

While all freelancers are self-employed, not all self-employed individuals are freelance. Freelancers generally focus on specific types of short-term, client-based project work. It largely comes down to the industry the individual works in.

For example, a marketing freelancer may have a short-term contract with a particular brand to launch a new product, where they are paid on a day rate.

Lenders typically like to see evidence of working as a freelancer for a period of two years or more, although some lenders don’t need this length of contracts. Speak to a mortgage broker for advice on what’s available to you.

How much can I borrow and how much deposit do you need for a mortgage as a freelancer? Will I need a large deposit?

The amount you can borrow is always based upon an assessment of your income and expenditure, like any mortgage application. The income assessment depends on the lender. Some will take your profit from self-employment based on your tax returns, while others can use the day rate from a current contract.

Your broker will be able to navigate this and explain what works best for you. The deposit requirements will be the same as for anyone who is employed, so, a minimum of 5%. The larger the deposit is as a percentage of the property purchase price, the better the interest rate will usually be on the mortgage.

How do lenders assess mortgages for freelancers? What documents do I need to have ready?

Lenders are going to look at the income and expenditure, and you will need documents to evidence your income. That could be your tax returns or your current contract, to show what your day rate is. I usually also like to see a bank statement showing that income being received, and to assess your overall expenditure.

How will my income be assessed as a freelancer?

Either by the day rate on the current contract or the income from the tax return. It does depend on how long that contract has got to run, and whether that work is sustainable going forward.

How many months of freelance income do you need for a mortgage?

This is going to depend on the lender, and their requirements will vary. Typically, a lender would like to see a history of working freelance for two years.

How many payslips do you need for a freelance mortgage?

You may get a payslip if you’re working on a contract. If you’re being paid on a day rate contract, some lenders would be happy to use just one month’s income. You just need to have the contract in place and evidence that income is being received on a bank statement.

There will need to be a significant amount of time remaining on the contract, so you can evidence to the mortgage lender that your income will be sustainable in future.

Can I get a mortgage without two years’ tax returns?

Yes, absolutely. You can use the income from the contract rather than your tax returns. It certainly helps if you can demonstrate experience of working in the same industry. You might have moved from an employed role to being a freelancer, and you can evidence that history and experience.

How much income history do freelancers need for a mortgage?

A mortgage lender is going to want to see a track record, and about two years would be ideal.

Can I get a mortgage as a freelancer with fluctuating income?

This is quite common for freelance workers. Lenders will usually take an average of the last two years income from the tax returns, or sometimes the latest year if it is lower.

It helps if you can provide some rationale behind that fluctuating income, or demonstrate that the income is not going to continue to decline.

What is a self-employed freelancer?

Freelance usually refers to a way of working in which individuals are self-employed and provide services to clients or organisations, rather than being permanently employed by a single organisation.

Freelancers often work on a project by project basis and are usually responsible for paying their own tax. So it’s very similar to someone who is self-employed.

Can I get a mortgage if I’m employed with part-time freelance income?

Yes, you can use incomes from both employment and part-time freelance work. Lenders like to see that both roles are sustainable. But it’s very normal to use incomes from various sources.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Approved by The Openwork Partnership on 11/7/2024