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How to get a mortgage when your profits have jumped up
We recognise that a generic approach doesn’t work for everyone, particularly for self-employed individuals.
If you’ve recently seen a significant increase in your profits, you might feel short-changed when your bank or other mortgage brokers say how much you can borrow.
Don’t panic…you’re about to witness how the UK’s self-employed mortgage experts can really make a difference!
We provide tailored mortgage solutions specifically designed for individuals whose profits have jumped up over the last 12 months.
Rather than using an average of the last 2 years, we’ll take your latest year’s profits resulting in the type of loan amount you’re looking for.
It’s important to note our application process is completely different too.
We’ll manually underwrite your mortgage thanks to our impressive in-house underwriting team. Without carrying out any credit checks, our well-equipped team quickly resolve any problems right from the get-go.
Our bespoke process ensures you’ll avoid any nasty surprises further down the line and won’t waste weeks of your time with rejected applications.
So, if you’d like to take advantage of getting a mortgage based on your most recent year’s profits, then put your feet up and we’ll take care of the rest.
Averaged Income vs Latest Year: Why It Matters
If your profits have risen sharply, the way a lender treats your accounts has a larger effect on your borrowing figure than your deposit, your credit profile or the rate you end up on.
Consider a sole trader whose net profit was £40,000 two years ago and £70,000 last year. A lender averaging the two assesses £55,000. A lender using the latest year alone assesses £70,000. At a multiple of 4.5, that is a difference of around £67,500 in borrowing from an identical set of accounts.
Figures are illustrative only. They are not a quotation and not an indication of what you could borrow.
High street lenders almost always average, because averaging is the cautious assumption and their processes are automated. Specialist lenders will consider the latest year alone where you can show the increase is sustainable rather than a one-off.
Evidencing That the Increase Will Last
An underwriter looking at a sharp increase will want to understand why it happened. What tends to satisfy them:
- an explanation of what changed, whether that is more clients, higher rates, a new contract or expanded capacity;
- year-to-date management accounts showing the higher level has continued into the current year;
- current contracts or a forward order book, where these exist;
- bank statements demonstrating consistent cashflow at the new level rather than a single large receipt.
An increase caused by one exceptional project is generally discounted, because it is not expected to recur. An increase caused by the business growing is a different proposition, and presenting the difference clearly is most of the work.
For directors leaving increased profit inside the company, our Limited Company Director Mortgages page explains how retained profit can be assessed.
What Documents Do I Need for a Mortgage When My Profits Have Jumped?
When you’ve had a strong year, lenders want to see clear proof of your earnings and business growth. The key documents usually include:
Having these ready and available speeds up the process and gives your broker everything they need to present your case to lenders clearly.
How Do Lenders Assess Income After a Jump in Profits?
Lenders look at your income trends carefully, especially if your latest year’s profits have increased sharply. The main approaches are:
That’s where using a self-employed mortgage expert makes a big difference. We know which lenders take a flexible, forward-looking approach – and the lenders which don’t.
How We Help Clients With Rising Profits Borrow More
Our mortgage process is built specifically for self-employed professionals with growing income. Here’s how we help:
This bespoke process helps self-employed borrowers turn their recent success into a stronger mortgage offer – without the frustration of being undervalued by automated systems.
Why Work With Us
Here are just a few ways we’re DIFFERENT from other companies
Self-Employed
Specialists
Specialists
In-House
Underwriting
Underwriting
Borrow
More Money
More Money
Proven
Success Rate
Success Rate
Jump in Profits Success Story
Sally, leading one of the UK’s fastest-growing companies, and her partner Toby secured their dream home with our help, despite the bank’s initial refusal. We made it possible, using her rise in recent profits
The new wave method
Here’s the SIX STEPS to GUARANTEE Self-Employed Mortgage SUCCESS
Pro-TIP:
Jump in Profits
Seeing a significant jump in profits has incredible benefits! Our expert Dylan provides one his favourite tips to ensure you take advantage of your successful year of trading without any added stress.
Ask our Experts
There is no fixed threshold, but a substantial year-on-year increase will prompt a lender to ask why. That is not a bad thing. A clear, evidenced explanation usually satisfies an underwriter, whereas an unexplained jump invites caution.
Lenders will generally discount income they do not expect to recur. If the jump reflects a single large project rather than a change in the underlying business, most will fall back to your averaged figures.
Some will, and it is often the difference between the borrowing you need and a figure well below it. It typically requires evidence that the higher level is sustainable, such as current contracts or year-to-date management accounts.
The principle is the same, but the evidence differs. Sole traders are assessed on net profit through SA302s, while directors may have salary, dividends and retained profit assessed in different combinations depending on the lender.
This is common with directors reinvesting in the business, and it is a good reason to seek a lender that assesses share of net profit rather than drawn income. On a dividends-only assessment, the profit sitting in the company is effectively invisible.
Sometimes. Where the most recent year is significantly stronger, year-to-date management accounts help demonstrate that the improvement has continued rather than peaked.
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What documents do I need to apply for a CIS Worker Mortgage?
Lenders want to see proof of both income and stability. As a CIS worker, you’ll usually need:
Having these ready makes the application process smoother and helps underwriters understand your earnings more clearly.
What documents do I need to apply for a CIS Worker Mortgage?
Lenders want to see proof of both income and stability. As a CIS worker, you’ll usually need:
Having these ready makes the application process smoother and helps underwriters understand your earnings more clearly.