Mortgages when you are self-employed

How the income is actually calculated

Lenders use what you declare after expenses, not what the business takes in. Two years of returns are averaged, with some add-backs for non-cash items like depreciation.

This is why aggressive write-offs cut both ways: they lower the tax bill and they lower the income a lender can count. Worth knowing in the year before you buy, not the week after.

• Two years of personal and business returns, typically
• Profit and loss, and business bank statements
• Add-backs for depreciation and some one-off costs
• A letter from an accountant often helps

Why local underwriting matters here

A self-employed file is full of judgment calls: how to treat a one-off expense, whether a dip in one year reflects the business or a circumstance.

An underwriter who can read the whole picture reaches a different answer from a system that scores it. That is the practical case for a lender who underwrites locally.

What to bring to the first conversation

Two years of returns, a current profit and loss, and an honest account of anything unusual in them.

Surfacing the awkward year at the start is far better than it appearing in underwriting three weeks in.

Questions people ask